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.
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 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.
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 Casey's General Stores?
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. Casey's General Stores (CASY) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $6.79 a share, just one day from its upcoming earnings release on September 8, 2026.
CASY has an Earnings ESP figure of +2.76%, which, as explained above, is calculated by taking the percentage difference between the $6.79 Most Accurate Estimate and the Zacks Consensus Estimate of $6.6. Casey's General Stores 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.
CASY is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Target (TGT).
Target is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on November 18, 2026. TGT's Most Accurate Estimate sits at $2.09 a share 72 days from its next earnings release.
The Zacks Consensus Estimate for Target is $2.04, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.19%.
CASY and TGT's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 Casey's General Stores, Inc. (CASY)?
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Casey's General Stores, Inc. (CASY): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).