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.
Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.
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.
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.
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 Realty Income Corp.?
The final step today is to look at a stock that meets our ESP qualifications. Realty Income Corp. (O) earns a #3 (Hold) four days from its next quarterly earnings release on February 24, 2026, and its Most Accurate Estimate comes in at $1.09 a share.
O has an Earnings ESP figure of +0.99%, which, as explained above, is calculated by taking the percentage difference between the $1.09 Most Accurate Estimate and the Zacks Consensus Estimate of $1.08. Realty Income Corp. 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.
O is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Capital Southwest (CSWC).
Slated to report earnings on May 13, 2026, Capital Southwest holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.57 a share 82 days from its next quarterly update.
For Capital Southwest, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.56 is +0.30%.
Because both stocks hold a positive Earnings ESP, O and CSWC 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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Realty Income Corporation (O): Free Stock Analysis Report Capital Southwest Corporation (CSWC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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