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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
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.
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 #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 Enphase Energy?
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. Enphase Energy (ENPH) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $0.64 a share, just 25 days from its upcoming earnings release on October 28, 2025.
ENPH has an Earnings ESP figure of +6.37%, which, as explained above, is calculated by taking the percentage difference between the $0.64 Most Accurate Estimate and the Zacks Consensus Estimate of $0.6. Enphase Energy 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.
ENPH is one of just a large database of Oils and Energy stocks with positive ESPs. Another solid-looking stock is Williams Companies, Inc. (The) (WMB).
Williams Companies, Inc. (The) is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 5, 2025. WMB's Most Accurate Estimate sits at $0.54 a share 33 days from its next earnings release.
Williams Companies, Inc. (The)'s Earnings ESP figure currently stands at +5.00% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.51.
Because both stocks hold a positive Earnings ESP, ENPH and WMB 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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Enphase Energy, Inc. (ENPH): Free Stock Analysis Report Williams Companies, Inc. (The) (WMB): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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