Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.
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.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider TC Energy?
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. TC Energy (TRP) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.62 a share, just seven days from its upcoming earnings release on July 30, 2026.
By taking the percentage difference between the $0.62 Most Accurate Estimate and the $0.59 Zacks Consensus Estimate, TC Energy has an Earnings ESP of +5.53%. Investors should also know that TRP 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.
TRP is just one of a large group of Oils and Energy stocks with a positive ESP figure. Transocean (RIG) is another qualifying stock you may want to consider.
Transocean, which is readying to report earnings on August 5, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $0.02 a share, and RIG is 13 days out from its next earnings report.
The Zacks Consensus Estimate for Transocean is $0.01, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +50.00%.
TRP and RIG'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 >>
Should You Invest in TC Energy Corporation (TRP)?
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TC Energy Corporation (TRP): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).