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.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
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.
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 EPR Properties?
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. EPR Properties (EPR) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.26 a share, just 30 days from its upcoming earnings release on July 30, 2025.
By taking the percentage difference between the $1.26 Most Accurate Estimate and the $1.25 Zacks Consensus Estimate, EPR Properties has an Earnings ESP of +0.66%. Investors should also know that EPR 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.
EPR is just one of a large group of Finance stocks with a positive ESP figure. Bank of Montreal (BMO) is another qualifying stock you may want to consider.
Bank of Montreal, which is readying to report earnings on August 26, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.09 a share, and BMO is 57 days out from its next earnings report.
For Bank of Montreal, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.07 is +0.56%.
EPR and BMO'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 >>
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EPR Properties (EPR): Free Stock Analysis Report Bank Of Montreal (BMO): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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