Why Investors Need to Take Advantage of These 2 Industrial Products 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.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Parker-Hannifin?

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. Parker-Hannifin (PH) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $7.11 a share, just 28 days from its upcoming earnings release on August 14, 2025.

By taking the percentage difference between the $7.11 Most Accurate Estimate and the $7.08 Zacks Consensus Estimate, Parker-Hannifin has an Earnings ESP of +0.39%. Investors should also know that PH 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.

PH is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is Atmus Filtration Technologies (ATMU).

Atmus Filtration Technologies, which is readying to report earnings on August 1, 2025, sits at a Zacks Rank #2 (Buy) right now. Its Most Accurate Estimate is currently $0.72 a share, and ATMU is 15 days out from its next earnings report.

Atmus Filtration Technologies' Earnings ESP figure currently stands at +9.64% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.66.

PH and ATMU's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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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