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.
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 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.
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 Bank of America?
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. Bank of America (BAC) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.96 a share one day away from its upcoming earnings release on January 14, 2026.
By taking the percentage difference between the $0.96 Most Accurate Estimate and the $0.95 Zacks Consensus Estimate, Bank of America has an Earnings ESP of +0.49%. Investors should also know that BAC 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.
BAC is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Prudential (PRU).
Slated to report earnings on February 3, 2026, Prudential holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $3.44 a share 21 days from its next quarterly update.
Prudential's Earnings ESP figure currently stands at +2.62% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.35.
Because both stocks hold a positive Earnings ESP, BAC and PRU 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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Bank of America Corporation (BAC): Free Stock Analysis Report Prudential Financial, Inc. (PRU): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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