Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.
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 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 #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.
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. Bank of Nova Scotia (BNS) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.57 a share, just 11 days from its upcoming earnings release on August 25, 2026.
Bank of Nova Scotia's Earnings ESP sits at +2.84%, which, as explained above, is calculated by taking the percentage difference between the $1.57 Most Accurate Estimate and the Zacks Consensus Estimate of $1.53. BNS is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
BNS is just one of a large group of Finance stocks with a positive ESP figure. Virtu Financial (VIRT) is another qualifying stock you may want to consider.
Virtu Financial is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 4, 2026. VIRT's Most Accurate Estimate sits at $1.51 a share 82 days from its next earnings release.
For Virtu Financial, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.45 is +3.65%.
Because both stocks hold a positive Earnings ESP, BNS and VIRT could potentially post earnings beats in their next reports.
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 >>
Before you invest in Bank of Nova Scotia (The) (BNS), want to know the best stocks to buy for the next 30 days? Check out Zacks Investment Research for our free report on the 7 best stocks to buy.
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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Originally published on zacks.com, part of the BLOX Digital Content Exchange.
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