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 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.
The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.
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 Idexx Laboratories?
The final step today is to look at a stock that meets our ESP qualifications. Idexx Laboratories (IDXX) earns a #3 (Hold) five days from its next quarterly earnings release on May 5, 2026, and its Most Accurate Estimate comes in at $3.45 a share.
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 +0.77%. 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 one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is HCA Healthcare (HCA).
HCA Healthcare is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on July 24, 2026. HCA's Most Accurate Estimate sits at $7.39 a share 85 days from its next earnings release.
The Zacks Consensus Estimate for HCA Healthcare is $7.38, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.10%.
IDXX and HCA'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 IDEXX Laboratories, Inc. (IDXX)?
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IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report
HCA Healthcare, Inc. (HCA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).