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.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
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.
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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Quanta Services?
Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Quanta Services (PWR) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $5.14 a share, just 29 days from its upcoming earnings release on October 29, 2026.
PWR has an Earnings ESP figure of +2.66%, which, as explained above, is calculated by taking the percentage difference between the $5.14 Most Accurate Estimate and the Zacks Consensus Estimate of $5.01. Quanta Services 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.
PWR is one of just a large database of Construction stocks with positive ESPs. Another solid-looking stock is Martin Marietta (MLM).
Slated to report earnings on November 3, 2026, Martin Marietta holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $6.91 a share 34 days from its next quarterly update.
Martin Marietta's Earnings ESP figure currently stands at +4.44% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $6.62.
Because both stocks hold a positive Earnings ESP, PWR and MLM 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 Quanta Services, Inc. (PWR)?
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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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Quanta Services, Inc. (PWR): Free Stock Analysis Report
Martin Marietta Materials, Inc. (MLM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).