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 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.
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 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 Tesla?
The final step today is to look at a stock that meets our ESP qualifications. Tesla (TSLA) earns a #3 (Hold) five days from its next quarterly earnings release on October 22, 2025, and its Most Accurate Estimate comes in at $0.55 a share.
By taking the percentage difference between the $0.55 Most Accurate Estimate and the $0.53 Zacks Consensus Estimate, Tesla has an Earnings ESP of +4.05%. Investors should also know that TSLA 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.
TSLA is one of just a large database of Auto, Tires and Trucks stocks with positive ESPs. Another solid-looking stock is Polaris Inc (PII).
Slated to report earnings on October 28, 2025, Polaris Inc holds a #1 (Strong Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.37 a share 11 days from its next quarterly update.
For Polaris Inc, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.18 is +101.82%.
TSLA and PII'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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Tesla, Inc. (TSLA): Free Stock Analysis Report Polaris Inc. (PII): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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