Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.
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.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. 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.
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 Ulta Beauty?
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. Ulta Beauty (ULTA) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $6.24 a share, just 16 days from its upcoming earnings release on August 27, 2026.
ULTA has an Earnings ESP figure of +1.20%, which, as explained above, is calculated by taking the percentage difference between the $6.24 Most Accurate Estimate and the Zacks Consensus Estimate of $6.17. Ulta Beauty 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.
ULTA is one of just a large database of Retail and Wholesale stocks with positive ESPs. Another solid-looking stock is Texas Roadhouse (TXRH).
Texas Roadhouse is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on November 5, 2026. TXRH's Most Accurate Estimate sits at $1.52 a share 86 days from its next earnings release.
The Zacks Consensus Estimate for Texas Roadhouse is $1.46, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +3.91%.
ULTA and TXRH's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 Ulta Beauty Inc. (ULTA)?
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PLEASE TURN OFF YOUR CAPS LOCK.
Don't Threaten. Threats of harming another person will not be tolerated.
Be Truthful. Don't knowingly lie about anyone or anything.
Be Nice. No racism, sexism or any sort of -ism that is degrading to another person.
Be Proactive. Use the 'Report' link on each comment to let us know of abusive posts.
Share with Us. We'd love to hear eyewitness accounts, the history behind an article.