Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Hubbell?
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. Hubbell (HUBB) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $4.72 a share seven days away from its upcoming earnings release on February 3, 2026.
HUBB has an Earnings ESP figure of +0.52%, which, as explained above, is calculated by taking the percentage difference between the $4.72 Most Accurate Estimate and the Zacks Consensus Estimate of $4.7. Hubbell 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.
HUBB is part of a big group of Industrial Products stocks that boast a positive ESP, and investors may want to take a look at Alcoa (AA) as well.
Alcoa is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on April 15, 2026. AA's Most Accurate Estimate sits at $1.27 a share 78 days from its next earnings release.
The Zacks Consensus Estimate for Alcoa is $1.12, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +12.85%.
HUBB and AA's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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Hubbell Inc (HUBB): Free Stock Analysis Report Alcoa (AA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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