Want Better Returns? Don't Ignore These 2 Finance Stocks Set to Beat Earnings

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.

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.

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 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.

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 Reinsurance Group?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Reinsurance Group (RGA) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $5.92 a share, just 28 days from its upcoming earnings release on February 5, 2026.

By taking the percentage difference between the $5.92 Most Accurate Estimate and the $5.86 Zacks Consensus Estimate, Reinsurance Group has an Earnings ESP of +0.96%. Investors should also know that RGA 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.

RGA is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Morgan Stanley (MS).

Slated to report earnings on January 15, 2026, Morgan Stanley holds a #1 (Strong Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $2.40 a share seven days from its next quarterly update.

The Zacks Consensus Estimate for Morgan Stanley is $2.36, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.72%.

RGA and MS' 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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This article originally published on Zacks Investment Research (zacks.com).

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