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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
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.
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 TJX?
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. TJX (TJX) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.19 a share, just 20 days from its upcoming earnings release on August 19, 2026.
By taking the percentage difference between the $1.19 Most Accurate Estimate and the $1.18 Zacks Consensus Estimate, TJX has an Earnings ESP of +1.19%. Investors should also know that TJX 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.
TJX is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Brinker International (EAT) as well.
Brinker International, which is readying to report earnings on August 12, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $3.08 a share, and EAT is 13 days out from its next earnings report.
For Brinker International, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.07 is +0.12%.
Because both stocks hold a positive Earnings ESP, TJX and EAT 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 The TJX Companies, Inc. (TJX)?
Before you invest in The TJX Companies, Inc. (TJX), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy.
Zacks Investment Research has been committed to providing investors with tools and independent research since 1978. For more than a quarter century, the Zacks Rank stock-rating system has more than doubled the S&P 500 with an average gain of +24.08% per year. (These returns cover a period from January 1, 1988 through May 6, 2024.)
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The TJX Companies, Inc. (TJX): Free Stock Analysis Report
Brinker International, Inc. (EAT): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).