How to Find Strong Business Services Stocks Slated for Positive Earnings Surprises

Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.

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 Booz Allen Hamilton?

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. Booz Allen Hamilton (BAH) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.61 a share, just four days from its upcoming earnings release on May 23, 2025.

By taking the percentage difference between the $1.61 Most Accurate Estimate and the $1.59 Zacks Consensus Estimate, Booz Allen Hamilton has an Earnings ESP of +1.42%. Investors should also know that BAH 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.

BAH is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Visa (V).

Visa is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on July 22, 2025. V's Most Accurate Estimate sits at $2.85 a share 64 days from its next earnings release.

For Visa, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.84 is +0.29%.

Because both stocks hold a positive Earnings ESP, BAH and V 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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This article originally published on Zacks Investment Research (zacks.com).

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