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.
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 Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Molson Coors Brewing?
The final step today is to look at a stock that meets our ESP qualifications. Molson Coors Brewing (TAP) earns a #3 (Hold) 14 days from its next quarterly earnings release on August 6, 2026, and its Most Accurate Estimate comes in at $1.54 a share.
Molson Coors Brewing's Earnings ESP sits at +1.28%, which, as explained above, is calculated by taking the percentage difference between the $1.54 Most Accurate Estimate and the Zacks Consensus Estimate of $1.52. TAP is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
TAP is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Monster Beverage (MNST) as well.
Slated to report earnings on August 6, 2026, Monster Beverage holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.60 a share 14 days from its next quarterly update.
For Monster Beverage, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.59 is +2.61%.
TAP and MNST's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 Molson Coors Beverage Company (TAP)?
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Molson Coors Beverage Company (TAP): Free Stock Analysis Report
Monster Beverage Corporation (MNST): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).