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.
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 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.
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 Hubbell?
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. Hubbell (HUBB) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $4.76 a share 26 days away from its upcoming earnings release on February 3, 2026.
By taking the percentage difference between the $4.76 Most Accurate Estimate and the $4.69 Zacks Consensus Estimate, Hubbell has an Earnings ESP of +1.55%. Investors should also know that HUBB 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.
HUBB is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Alcoa (AA) as well.
Alcoa is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on January 22, 2026. AA's Most Accurate Estimate sits at $1.08 a share 14 days from its next earnings release.
For Alcoa, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.96 is +12.50%.
HUBB and AA's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Hubbell Inc (HUBB): Free Stock Analysis Report Alcoa (AA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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