Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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.
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.
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 Kirby?
The final step today is to look at a stock that meets our ESP qualifications. Kirby (KEX) earns a #2 (Buy) 16 days from its next quarterly earnings release on July 29, 2026, and its Most Accurate Estimate comes in at $1.74 a share.
By taking the percentage difference between the $1.74 Most Accurate Estimate and the $1.7 Zacks Consensus Estimate, Kirby has an Earnings ESP of +2.66%. Investors should also know that KEX 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.
KEX is one of just a large database of Transportation stocks with positive ESPs. Another solid-looking stock is American Airlines (AAL).
Slated to report earnings on July 23, 2026, American Airlines holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.09 a share 10 days from its next quarterly update.
The Zacks Consensus Estimate for American Airlines is $0.05, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +67.44%.
Because both stocks hold a positive Earnings ESP, KEX and AAL 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 Kirby Corporation (KEX)?
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Kirby Corporation (KEX): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).