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.
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.
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 C.H. Robinson Worldwide?
The final step today is to look at a stock that meets our ESP qualifications. C.H. Robinson Worldwide (CHRW) earns a #2 (Buy) 29 days from its next quarterly earnings release on February 4, 2026, and its Most Accurate Estimate comes in at $1.14 a share.
C.H. Robinson Worldwide's Earnings ESP sits at +2.10%, which, as explained above, is calculated by taking the percentage difference between the $1.14 Most Accurate Estimate and the Zacks Consensus Estimate of $1.11. CHRW 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.
CHRW is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at Copa Holdings (CPA) as well.
Copa Holdings is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 11, 2026. CPA's Most Accurate Estimate sits at $4.56 a share 36 days from its next earnings release.
Copa Holdings' Earnings ESP figure currently stands at +2.78% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.44.
Because both stocks hold a positive Earnings ESP, CHRW and CPA 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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C.H. Robinson Worldwide, Inc. (CHRW): 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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