Why Investors Need to Take Advantage of These 2 Aerospace Stocks Now

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), or the top 15% and top 5% of stocks, respectively, should outperform the market; Strong Buy stocks should outperform more than any other rank.

Should You Consider Textron?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Textron (TXT) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.45 a share, just 10 days from its upcoming earnings release on July 24, 2025.

TXT has an Earnings ESP figure of +0.58%, which, as explained above, is calculated by taking the percentage difference between the $1.45 Most Accurate Estimate and the Zacks Consensus Estimate of $1.44. Textron is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

TXT is one of just a large database of Aerospace stocks with positive ESPs. Another solid-looking stock is TransDigm Group (TDG).

TransDigm Group, which is readying to report earnings on August 5, 2025, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $9.88 a share, and TDG is 22 days out from its next earnings report.

TransDigm Group's Earnings ESP figure currently stands at +1.27% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $9.75.

Because both stocks hold a positive Earnings ESP, TXT and TDG could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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This article originally published on Zacks Investment Research (zacks.com).

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