How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises

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.

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.

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.

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 MasterCard?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. MasterCard (MA) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $4.06 a share nine days away from its upcoming earnings release on July 31, 2025.

MA has an Earnings ESP figure of +0.21%, which, as explained above, is calculated by taking the percentage difference between the $4.06 Most Accurate Estimate and the Zacks Consensus Estimate of $4.05. MasterCard 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.

MA is part of a big group of Business Services stocks that boast a positive ESP, and investors may want to take a look at Geo Group (GEO) as well.

Slated to report earnings on August 6, 2025, Geo Group holds a #1 (Strong Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.17 a share 15 days from its next quarterly update.

The Zacks Consensus Estimate for Geo Group is $0.16, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +4.62%.

MA and GEO'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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