Why They Should Be on Your Radar

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.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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. TSMC (TSM) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $2.58 a share 17 days away from its upcoming earnings release on October 16, 2025.

By taking the percentage difference between the $2.58 Most Accurate Estimate and the $2.55 Zacks Consensus Estimate, TSMC has an Earnings ESP of +1.08%.

TSM 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.

Lam Research is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 22, 2025. LRCX’s Most Accurate Estimate sits at $1.23 a share 23 days from its next earnings release.

For Lam Research, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.21 is +1.30%.

TSM and LRCX’s positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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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