How to Boost Your Portfolio with Top Aerospace Stocks Set to Beat Earnings

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.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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 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.

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.

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 Leidos?

The final step today is to look at a stock that meets our ESP qualifications. Leidos (LDOS) earns a #3 (Hold) 20 days from its next quarterly earnings release on April 29, 2025, and its Most Accurate Estimate comes in at $2.50 a share.

LDOS has an Earnings ESP figure of +1.15%, which, as explained above, is calculated by taking the percentage difference between the $2.50 Most Accurate Estimate and the Zacks Consensus Estimate of $2.47. Leidos 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.

LDOS is part of a big group of Aerospace stocks that boast a positive ESP, and investors may want to take a look at Embraer (ERJ) as well.

Embraer, which is readying to report earnings on May 6, 2025, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.43 a share, and ERJ is 27 days out from its next earnings report.

For Embraer, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.28 is +53.57%.

LDOS and ERJ'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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research