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.
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.
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, 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 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 Dycom Industries?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Dycom Industries (DY) holds a #1 (Strong Buy) at the moment and its Most Accurate Estimate comes in at $4.66 a share 30 days away from its upcoming earnings release on August 19, 2026.
DY has an Earnings ESP figure of +0.47%, which, as explained above, is calculated by taking the percentage difference between the $4.66 Most Accurate Estimate and the Zacks Consensus Estimate of $4.64. Dycom Industries 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.
DY is just one of a large group of Construction stocks with a positive ESP figure. United Rentals (URI) is another qualifying stock you may want to consider.
Slated to report earnings on July 22, 2026, United Rentals holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $11.84 a share two days from its next quarterly update.
The Zacks Consensus Estimate for United Rentals is $11.67, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.39%.
DY and URI'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 Dycom Industries, Inc. (DY)?
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Dycom Industries, Inc. (DY): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).