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.
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.
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.
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 Newmont Corporation?
The final step today is to look at a stock that meets our ESP qualifications. Newmont Corporation (NEM) earns a #3 (Hold) 13 days from its next quarterly earnings release on February 19, 2026, and its Most Accurate Estimate comes in at $2.04 a share.
By taking the percentage difference between the $2.04 Most Accurate Estimate and the $1.78 Zacks Consensus Estimate, Newmont Corporation has an Earnings ESP of +14.61%. Investors should also know that NEM 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.
NEM is just one of a large group of Basic Materials stocks with a positive ESP figure. SQM (SQM) is another qualifying stock you may want to consider.
SQM is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on March 3, 2026. SQM's Most Accurate Estimate sits at $0.85 a share 25 days from its next earnings release.
For SQM, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.75 is +13.33%.
Because both stocks hold a positive Earnings ESP, NEM and SQM 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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Newmont Corporation (NEM): Free Stock Analysis Report Sociedad Quimica y Minera S.A. (SQM): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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