Why They Should Be on Your Radar

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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 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. 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 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. ON Semiconductor Corp. (ON) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $0.63 a share 19 days away from its upcoming earnings release on August 4, 2025.

By taking the percentage difference between the $0.63 Most Accurate Estimate and the $0.54 Zacks Consensus Estimate, ON Semiconductor Corp. has an Earnings ESP of +16.85%.

ON is just one of a large group of Computer and Technology stocks with a positive ESP figure. Lam Research (LRCX) is another qualifying stock you may want to consider.

Slated to report earnings on July 30, 2025, Lam Research holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $1.22 a share 14 days from its next quarterly update.

For Lam Research, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.2 is +1.87%.

Because both stocks hold a positive Earnings ESP, ON and LRCX 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 >>

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