Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 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.
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 #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 Parker-Hannifin?
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. Parker-Hannifin (PH) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $7.10 a share three days away from its upcoming earnings release on August 7, 2025.
By taking the percentage difference between the $7.10 Most Accurate Estimate and the $7.08 Zacks Consensus Estimate, Parker-Hannifin has an Earnings ESP of +0.24%. 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 part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Hubbell (HUBB) as well.
Slated to report earnings on November 4, 2025, Hubbell holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $4.99 a share 92 days from its next quarterly update.
Hubbell's Earnings ESP figure currently stands at +0.40% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.97.
Because both stocks hold a positive Earnings ESP, PH and HUBB 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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Parker-Hannifin Corporation (PH): Free Stock Analysis Report Hubbell Inc (HUBB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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