Why Investors Need to Take Advantage of These 2 Business Services Stocks Now

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.

The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.

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.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Gen Digital?

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. Gen Digital (GEN) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $0.61 a share, just 21 days from its upcoming earnings release on August 7, 2025.

By taking the percentage difference between the $0.61 Most Accurate Estimate and the $0.6 Zacks Consensus Estimate, Gen Digital has an Earnings ESP of +1.67%. Investors should also know that GEN is one of a large group 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.

GEN is just one of a large group of Business Services stocks with a positive ESP figure. Fidelity National Information Services (FIS) is another qualifying stock you may want to consider.

Slated to report earnings on August 5, 2025, Fidelity National Information Services holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $1.37 a share 19 days from its next quarterly update.

Fidelity National Information Services' Earnings ESP figure currently stands at +0.87% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.36.

Because both stocks hold a positive Earnings ESP, GEN and FIS 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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