How to Find Strong Transportation Stocks Slated for Positive Earnings Surprises

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

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.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

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 C.H. Robinson Worldwide?

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. C.H. Robinson Worldwide (CHRW) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.06 a share, just 30 days from its upcoming earnings release on May 7, 2025.

C.H. Robinson Worldwide's Earnings ESP sits at +0.78%, which, as explained above, is calculated by taking the percentage difference between the $1.06 Most Accurate Estimate and the Zacks Consensus Estimate of $1.05. CHRW 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.

CHRW is just one of a large group of Transportation stocks with a positive ESP figure. Southwest Airlines (LUV) is another qualifying stock you may want to consider.

Slated to report earnings on April 24, 2025, Southwest Airlines holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.17 a share 17 days from its next quarterly update.

The Zacks Consensus Estimate for Southwest Airlines is -$0.17, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.77%.

CHRW and LUV'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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This article originally published on Zacks Investment Research (zacks.com).

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