Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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 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.
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 Advanced Micro Devices?
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. Advanced Micro Devices (AMD) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $1.36 a share six days away from its upcoming earnings release on May 5, 2026.
AMD has an Earnings ESP figure of +5.02%, which, as explained above, is calculated by taking the percentage difference between the $1.36 Most Accurate Estimate and the Zacks Consensus Estimate of $1.3. Advanced Micro Devices 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.
AMD is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Match Group (MTCH).
Slated to report earnings on May 5, 2026, Match Group holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.95 a share six days from its next quarterly update.
For Match Group, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.92 is +3.26%.
Because both stocks hold a positive Earnings ESP, AMD and MTCH 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 Advanced Micro Devices, Inc. (AMD)?
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Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).