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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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 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.
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 Editas Medicine?
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. Editas Medicine (EDIT) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at -$0.16 a share 28 days away from its upcoming earnings release on May 11, 2026.
EDIT has an Earnings ESP figure of +45.76%, which, as explained above, is calculated by taking the percentage difference between the -$0.16 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.3. Editas Medicine 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.
EDIT is just one of a large group of Medical stocks with a positive ESP figure. Regeneron (REGN) is another qualifying stock you may want to consider.
Regeneron, 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 $9.23 a share, and REGN is 16 days out from its next earnings report.
For Regeneron, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $8.42 is +9.51%.
Because both stocks hold a positive Earnings ESP, EDIT and REGN 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 Editas Medicine, Inc. (EDIT)?
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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.)
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Editas Medicine, Inc. (EDIT): Free Stock Analysis Report
Regeneron Pharmaceuticals, Inc. (REGN): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).