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.
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.
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.
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.
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 Stanley Black & Decker?
The final step today is to look at a stock that meets our ESP qualifications. Stanley Black & Decker (SWK) earns a #3 (Hold) 30 days from its next quarterly earnings release on April 29, 2026, and its Most Accurate Estimate comes in at $0.68 a share.
Stanley Black & Decker's Earnings ESP sits at +12.13%, which, as explained above, is calculated by taking the percentage difference between the $0.68 Most Accurate Estimate and the Zacks Consensus Estimate of $0.61. SWK 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.
SWK is just one of a large group of Industrial Products stocks with a positive ESP figure. Eaton (ETN) is another qualifying stock you may want to consider.
Slated to report earnings on May 1, 2026, Eaton holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $2.79 a share 32 days from its next quarterly update.
Eaton's Earnings ESP figure currently stands at +1.74% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.74.
SWK and ETN'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 Stanley Black & Decker, Inc. (SWK)?
Before you invest in Stanley Black & Decker, Inc. (SWK), 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
Stanley Black & Decker, Inc. (SWK): Free Stock Analysis Report
Eaton Corporation, PLC (ETN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).