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.
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.
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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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.
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 Crescent Energy?
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. Crescent Energy (CRGY) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.35 a share five days away from its upcoming earnings release on November 3, 2025.
CRGY has an Earnings ESP figure of +6.48%, which, as explained above, is calculated by taking the percentage difference between the $0.35 Most Accurate Estimate and the Zacks Consensus Estimate of $0.32. Crescent Energy 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.
CRGY is just one of a large group of Oils and Energy stocks with a positive ESP figure. Eni SpA (E) is another qualifying stock you may want to consider.
Slated to report earnings on February 26, 2026, Eni SpA holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.84 a share 120 days from its next quarterly update.
The Zacks Consensus Estimate for Eni SpA is $0.80, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +5.66%.
CRGY and E'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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Crescent Energy Company (CRGY): Free Stock Analysis Report Eni SpA (E): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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