These 2 Aerospace Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks Investment Research highlights its Earnings ESP (Expected Surprise Prediction) methodology as a tool for identifying stocks likely to beat quarterly earnings estimates, based on comparing the Most Accurate Estimate (latest analyst revision) with the Zacks Consensus Estimate. The strategy, which combines a positive ESP with a Zacks Rank #3 (Hold) or better, has historically yielded positive earnings surprises 70% of the time and an average annual return of 28.3% over a 10-year backtest. Aerospace companies RTX (RTX) and Embraer (ERJ) are presented as current examples, both holding a Zacks Rank #3 with positive ESPs of +1.53% and +5.00% respectively, signaling potential upside ahead of their Q4 2025 earnings reports.

Analysis

The article introduces the Zacks Earnings ESP (Expected Surprise Prediction) methodology as a significant indicator for identifying stocks likely to beat quarterly earnings estimates. This system, which compares the Most Accurate Estimate (latest analyst revision) against the Zacks Consensus Estimate, has a strong historical track record; when combined with a Zacks Rank #3 (Hold) or better, it has predicted positive earnings surprises 70% of the time. A 10-year backtest of this strategy demonstrated an impressive average annual return of 28.3%, highlighting its potential efficacy in generating alpha.

Currently, two aerospace sector stocks, RTX and Embraer (ERJ), are highlighted as fitting this criteria. RTX, holding a Zacks Rank #3, shows a positive ESP of +1.53%, derived from a Most Accurate Estimate of $1.44 versus a consensus of $1.42 for its October 21, 2025 earnings release. This suggests a higher probability of an earnings beat for RTX.

Similarly, Embraer (ERJ), also a Zacks Rank #3 stock, exhibits an even stronger positive ESP of +5.00%, with its Most Accurate Estimate of $0.70 surpassing the $0.67 consensus for its November 14, 2025 earnings. The consistent positive ESPs for both RTX and ERJ, coupled with their Zacks Rank, indicate a favorable outlook for their upcoming earnings reports, potentially leading to positive stock price reactions in the near term.

Key Decisions for Investors

• Investors should closely monitor RTX and ERJ ahead of their respective Q4 2025 earnings reports, given their positive Earnings ESPs and Zacks Rank #3 status, which historically correlate with earnings beats.
• Consider integrating the Zacks Earnings ESP methodology into pre-earnings analysis, particularly for stocks with a Zacks Rank #3 or better, as it has demonstrated a strong historical track record of identifying positive earnings surprises and generating significant returns.
• While the ESP indicates a higher probability of an earnings beat, investors should conduct their own fundamental due diligence on RTX and ERJ, assessing broader industry trends and company-specific risks beyond this predictive tool.