These 2 Aerospace Stocks Could Beat Earnings: Why They Should Be on Your Radar

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.

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.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

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.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 TransDigm 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. TransDigm Group (TDG) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $8.61 a share, just 20 days from its upcoming earnings release on February 3, 2026.

TDG has an Earnings ESP figure of +7.33%, which, as explained above, is calculated by taking the percentage difference between the $8.61 Most Accurate Estimate and the Zacks Consensus Estimate of $8.02. TransDigm Group is one of a large database 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.

TDG is just one of a large group of Aerospace stocks with a positive ESP figure. Northrop Grumman (NOC) is another qualifying stock you may want to consider.

Slated to report earnings on January 27, 2026, Northrop Grumman holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $7.03 a share 13 days from its next quarterly update.

The Zacks Consensus Estimate for Northrop Grumman is $6.99, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.54%.

Because both stocks hold a positive Earnings ESP, TDG and NOC 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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This article originally published on Zacks Investment Research (zacks.com).

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