Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 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.
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 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 Quanta Services?
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. Quanta Services (PWR) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $2.44 a share six days away from its upcoming earnings release on July 31, 2025.
Quanta Services' Earnings ESP sits at +0.34%, which, as explained above, is calculated by taking the percentage difference between the $2.44 Most Accurate Estimate and the Zacks Consensus Estimate of $2.43. PWR is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
PWR is just one of a large group of Construction stocks with a positive ESP figure. United Rentals (URI) is another qualifying stock you may want to consider.
United Rentals is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 22, 2025. URI's Most Accurate Estimate sits at $12.71 a share 89 days from its next earnings release.
For United Rentals, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $12.30 is +3.37%.
PWR and URI's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Quanta Services, Inc. (PWR): Free Stock Analysis Report United Rentals, Inc. (URI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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