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.
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.
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 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.
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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 look at a qualifying stock. Crown Castle (CCI) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.04 a share 30 days away from its upcoming earnings release on July 16, 2025.
Crown Castle’s Earnings ESP sits at 3.56%, which, as explained above, is calculated by taking the percentage difference between the $1.04 Most Accurate Estimate and the Zacks Consensus Estimate of $1.
CCI is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Rithm (RITM) as well.
Slated to report earnings on July 30, 2025, Rithm holds a #2 (Buy) ranking on the Zacks Rank, and it’s Most Accurate Estimate is $0.54 a share 44 days from its next quarterly update.
The Zacks Consensus Estimate for Rithm is $0.52, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 3.85%.
CCI and RITM’s positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>
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