Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 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.
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 MasterCard?
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. MasterCard (MA) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.32 a share three days away from its upcoming earnings release on October 30, 2025.
By taking the percentage difference between the $4.32 Most Accurate Estimate and the $4.31 Zacks Consensus Estimate, MasterCard has an Earnings ESP of +0.26%. Investors should also know that MA 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.
MA is just one of a large group of Business Services stocks with a positive ESP figure. Fidelity National Information Services (FIS) is another qualifying stock you may want to consider.
Slated to report earnings on November 5, 2025, Fidelity National Information Services holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $1.49 a share nine days from its next quarterly update.
The Zacks Consensus Estimate for Fidelity National Information Services is $1.48, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.20%.
Because both stocks hold a positive Earnings ESP, MA and FIS could potentially post earnings beats in their next reports.
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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Mastercard Incorporated (MA): Free Stock Analysis Report Fidelity National Information Services, Inc. (FIS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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