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.
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.
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 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.
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 #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 FedEx?
The final step today is to look at a stock that meets our ESP qualifications. FedEx (FDX) earns a #3 (Hold) 30 days from its next quarterly earnings release on December 18, 2025, and its Most Accurate Estimate comes in at $4.07 a share.
By taking the percentage difference between the $4.07 Most Accurate Estimate and the $4.02 Zacks Consensus Estimate, FedEx has an Earnings ESP of +1.29%. Investors should also know that FDX 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.
FDX is one of just a large database of Transportation stocks with positive ESPs. Another solid-looking stock is Copa Holdings (CPA).
Copa Holdings is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 19, 2025. CPA's Most Accurate Estimate sits at $4.30 a share one day from its next earnings release.
The Zacks Consensus Estimate for Copa Holdings is $4.03, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +6.78%.
FDX and CPA'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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FedEx Corporation (FDX): Free Stock Analysis Report Copa Holdings, S.A. (CPA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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