Why They Should Be on Your Radar

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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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.

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. 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.

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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. American Express (AXP) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $3.04 a share, just 11 days from its upcoming earnings release on January 24, 2025.

By taking the percentage difference between the $3.04 Most Accurate Estimate and the $3.02 Zacks Consensus Estimate, American Express has an Earnings ESP of 0.56%.

AXP is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Victory Capital Holdings (VCTR).

Victory Capital Holdings, which is readying to report earnings on February 13, 2025, sits at a Zacks Rank #2 (Buy) right now. It’s Most Accurate Estimate is currently $1.40 a share, and VCTR is 31 days out from its next earnings report.

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Victory Capital Holdings’ Earnings ESP figure currently stands at 0.54% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.39.

Because both stocks hold a positive Earnings ESP, AXP and VCTR could potentially post earnings beats in their next reports.

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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