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 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.
Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Eni SpA?
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. Eni SpA (E) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $1.23 a share, just 23 days from its upcoming earnings release on April 23, 2026.
By taking the percentage difference between the $1.23 Most Accurate Estimate and the $1.05 Zacks Consensus Estimate, Eni SpA has an Earnings ESP of +17.70%. Investors should also know that E 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.
E is just one of a large group of Oils and Energy stocks with a positive ESP figure. Clearway Energy (CWEN) is another qualifying stock you may want to consider.
Clearway Energy, which is readying to report earnings on April 29, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $0.07 a share, and CWEN is 29 days out from its next earnings report.
For Clearway Energy, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.29 is +124.09%.
E and CWEN'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 Eni SpA (E)?
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Eni SpA (E): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).