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.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.
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.
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 Copa Holdings?
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. Copa Holdings (CPA) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.11 a share 14 days away from its upcoming earnings release on November 19, 2025.
Copa Holdings' Earnings ESP sits at +1.93%, which, as explained above, is calculated by taking the percentage difference between the $4.11 Most Accurate Estimate and the Zacks Consensus Estimate of $4.03. CPA is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
CPA is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at United Parcel Service (UPS) as well.
Slated to report earnings on January 29, 2026, United Parcel Service holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $2.18 a share 85 days from its next quarterly update.
For United Parcel Service, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.15 is +1.20%.
CPA and UPS' 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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Copa Holdings, S.A. (CPA): Free Stock Analysis Report United Parcel Service, Inc. (UPS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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