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.
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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 Carlisle?
The final step today is to look at a stock that meets our ESP qualifications. Carlisle (CSL) earns a #3 (Hold) one day from its next quarterly earnings release on July 30, 2025, and its Most Accurate Estimate comes in at $6.69 a share.
Carlisle's Earnings ESP sits at +0.24%, which, as explained above, is calculated by taking the percentage difference between the $6.69 Most Accurate Estimate and the Zacks Consensus Estimate of $6.67. CSL 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.
CSL is part of a big group of Multi-Sector Conglomerates stocks that boast a positive ESP, and investors may want to take a look at 3M (MMM) as well.
3M, which is readying to report earnings on October 28, 2025, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $2.08 a share, and MMM is 91 days out from its next earnings report.
The Zacks Consensus Estimate for 3M is $2.07, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.91%.
CSL and MMM'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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Carlisle Companies Incorporated (CSL): Free Stock Analysis Report 3M Company (MMM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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