Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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, 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.
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 Las Vegas Sands?
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. Las Vegas Sands (LVS) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.79 a share, just 14 days from its upcoming earnings release on February 4, 2026.
By taking the percentage difference between the $0.79 Most Accurate Estimate and the $0.78 Zacks Consensus Estimate, Las Vegas Sands has an Earnings ESP of +1.07%. Investors should also know that LVS 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.
LVS is one of just a large database of Consumer Discretionary stocks with positive ESPs. Another solid-looking stock is Netflix (NFLX).
Slated to report earnings on April 16, 2026, Netflix holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.83 a share 85 days from its next quarterly update.
The Zacks Consensus Estimate for Netflix is $0.80, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.08%.
LVS and NFLX'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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Las Vegas Sands Corp. (LVS): Free Stock Analysis Report Netflix, Inc. (NFLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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