Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more 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.
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.
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 Idexx Laboratories?
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. Idexx Laboratories (IDXX) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.45 a share, just 21 days from its upcoming earnings release on May 5, 2026.
By taking the percentage difference between the $3.45 Most Accurate Estimate and the $3.42 Zacks Consensus Estimate, Idexx Laboratories has an Earnings ESP of +0.79%. Investors should also know that IDXX 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.
IDXX is just one of a large group of Medical stocks with a positive ESP figure. Thermo Fisher Scientific (TMO) is another qualifying stock you may want to consider.
Slated to report earnings on April 23, 2026, Thermo Fisher Scientific holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $5.27 a share nine days from its next quarterly update.
The Zacks Consensus Estimate for Thermo Fisher Scientific is $5.21, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.23%.
Because both stocks hold a positive Earnings ESP, IDXX and TMO could potentially post earnings beats in their next reports.
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 IDEXX Laboratories, Inc. (IDXX)?
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IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report
Thermo Fisher Scientific Inc. (TMO): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).