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.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Nvidia?
The final step today is to look at a stock that meets our ESP qualifications. Nvidia (NVDA) earns a #2 (Buy) 29 days from its next quarterly earnings release on November 19, 2025, and its Most Accurate Estimate comes in at $1.25 a share.
By taking the percentage difference between the $1.25 Most Accurate Estimate and the $1.23 Zacks Consensus Estimate, Nvidia has an Earnings ESP of +1.33%. Investors should also know that NVDA 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.
NVDA is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Qualcomm (QCOM).
Qualcomm, which is readying to report earnings on November 5, 2025, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $2.91 a share, and QCOM is 15 days out from its next earnings report.
Qualcomm's Earnings ESP figure currently stands at +1.43% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.87.
NVDA and QCOM's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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NVIDIA Corporation (NVDA): Free Stock Analysis Report QUALCOMM Incorporated (QCOM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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