Why Investors Need to Take Advantage of These 2 Finance Stocks Now

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.

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, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

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.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider Allstate?

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 quickly look at a qualifying stock. Allstate (ALL) holds a #1 (Strong Buy) at the moment and its Most Accurate Estimate comes in at $8.20 a share 30 days away from its upcoming earnings release on April 29, 2026.

ALL has an Earnings ESP figure of +6.50%, which, as explained above, is calculated by taking the percentage difference between the $8.20 Most Accurate Estimate and the Zacks Consensus Estimate of $7.7. Allstate 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.

ALL is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Lemonade (LMND) as well.

Lemonade is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on May 5, 2026. LMND's Most Accurate Estimate sits at -$0.57 a share 36 days from its next earnings release.

For Lemonade, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.58 is +2.06%.

ALL and LMND'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 >>

Should You Invest in The Allstate Corporation (ALL)?

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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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The Allstate Corporation (ALL): Free Stock Analysis Report

Lemonade, Inc. (LMND): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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