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.
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.
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.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 Jakks Pacific?
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. Jakks Pacific (JAKK) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $0.37 a share, just two days from its upcoming earnings release on July 23, 2026.
JAKK has an Earnings ESP figure of +51.02%, which, as explained above, is calculated by taking the percentage difference between the $0.37 Most Accurate Estimate and the Zacks Consensus Estimate of $0.25. Jakks Pacific 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.
JAKK is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. Caesars Entertainment (CZR) is another qualifying stock you may want to consider.
Caesars Entertainment, which is readying to report earnings on July 28, 2026, sits at a Zacks Rank #2 (Buy) right now. Its Most Accurate Estimate is currently $0.07 a share, and CZR is seven days out from its next earnings report.
For Caesars Entertainment, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.04 is +69.64%.
Because both stocks hold a positive Earnings ESP, JAKK and CZR 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 >>
Should You Invest in JAKKS Pacific, Inc. (JAKK)?
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JAKKS Pacific, Inc. (JAKK): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).