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.
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.
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.
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 Excelerate Energy?
The final step today is to look at a stock that meets our ESP qualifications. Excelerate Energy (EE) earns a #3 (Hold) 16 days from its next quarterly earnings release on February 25, 2026, and its Most Accurate Estimate comes in at $0.31 a share.
Excelerate Energy's Earnings ESP sits at +7.64%, which, as explained above, is calculated by taking the percentage difference between the $0.31 Most Accurate Estimate and the Zacks Consensus Estimate of $0.29. EE 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.
EE is one of just a large database of Oils and Energy stocks with positive ESPs. Another solid-looking stock is Sunrun (RUN).
Sunrun, which is readying to report earnings on February 26, 2026, sits at a Zacks Rank #2 (Buy) right now. Its Most Accurate Estimate is currently $0.01 a share, and RUN is 17 days out from its next earnings report.
For Sunrun, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.08 is +116.43%.
EE and RUN'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 >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Excelerate Energy, Inc. (EE): Free Stock Analysis Report Sunrun Inc. (RUN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
