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.
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, 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 Seagate?
The final step today is to look at a stock that meets our ESP qualifications. Seagate (STX) earns a #3 (Hold) 21 days from its next quarterly earnings release on May 5, 2026, and its Most Accurate Estimate comes in at $3.47 a share.
STX has an Earnings ESP figure of +1.23%, which, as explained above, is calculated by taking the percentage difference between the $3.47 Most Accurate Estimate and the Zacks Consensus Estimate of $3.43. Seagate 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.
STX is just one of a large group of Computer and Technology stocks with a positive ESP figure. Akamai Technologies (AKAM) is another qualifying stock you may want to consider.
Slated to report earnings on May 7, 2026, Akamai Technologies holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $1.64 a share 23 days from its next quarterly update.
The Zacks Consensus Estimate for Akamai Technologies is $1.61, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.86%.
STX and AKAM'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 Seagate Technology Holdings PLC (STX)?
Before you invest in Seagate Technology Holdings PLC (STX), 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
Seagate Technology Holdings PLC (STX): Free Stock Analysis Report
Akamai Technologies, Inc. (AKAM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).