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.
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 Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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 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 e.l.f. Beauty?
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. e.l.f. Beauty (ELF) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.69 a share 30 days away from its upcoming earnings release on November 5, 2025.
ELF has an Earnings ESP figure of +17.28%, which, as explained above, is calculated by taking the percentage difference between the $0.69 Most Accurate Estimate and the Zacks Consensus Estimate of $0.59. e.l.f. Beauty 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.
ELF is one of just a large database of Consumer Staples stocks with positive ESPs. Another solid-looking stock is Lamb Weston (LW).
Lamb Weston is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on December 18, 2025. LW's Most Accurate Estimate sits at $0.68 a share 73 days from its next earnings release.
For Lamb Weston, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.64 is +6.16%.
ELF and LW'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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e.l.f. Beauty (ELF): Free Stock Analysis Report Lamb Weston (LW): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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