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.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Agnico Eagle Mines?
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. Agnico Eagle Mines (AEM) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $2.68 a share, just 30 days from its upcoming earnings release on February 12, 2026.
Agnico Eagle Mines' Earnings ESP sits at +26.22%, which, as explained above, is calculated by taking the percentage difference between the $2.68 Most Accurate Estimate and the Zacks Consensus Estimate of $2.12. AEM 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.
AEM is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Kinross Gold (KGC).
Slated to report earnings on February 11, 2026, Kinross Gold holds a #1 (Strong Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.52 a share 29 days from its next quarterly update.
For Kinross Gold, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.50 is +4.00%.
AEM and KGC'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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Agnico Eagle Mines Limited (AEM): Free Stock Analysis Report Kinross Gold Corporation (KGC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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