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.
Now that we know how important earnings and earnings surprises are, it’s time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
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.
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 #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, 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 ANI Pharmaceuticals?
The final step today is to look at a stock that meets our ESP qualifications. ANI Pharmaceuticals (ANIP – Free Report) earns a #1 (Strong Buy) 30 days from its next quarterly earnings release on May 9, 2025, and its Most Accurate Estimate comes in at $1.44 a share.
ANIP has an Earnings ESP figure of +5.11%, which, as explained above, is calculated by taking the percentage difference between the $1.44 Most Accurate Estimate and the Zacks Consensus Estimate of $1.37. ANI Pharmaceuticals 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.
ANIP is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Novavax (NVAX – Free Report) as well.
Novavax, which is readying to report earnings on May 9, 2025, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently -$0.42 a share, and NVAX is 30 days out from its next earnings report.
Novavax’s Earnings ESP figure currently stands at +2.33% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.43.
ANIP and NVAX’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 >>
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