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

Zacks Investment Research highlights its Earnings ESP tool as a method for identifying stocks likely to beat earnings estimates, noting that a positive ESP combined with a Zacks Rank #3 (Hold) or better has historically led to positive earnings surprises 70% of the time, yielding 28.3% average annual returns. The tool calculates the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate. American Express (AXP) and Bank of Nova Scotia (BNS) are presented as current examples, both holding a Zacks Rank #3 and positive ESPs (+0.48% for AXP, +1.56% for BNS), indicating potential upside surprises in their upcoming reports.

Analysis

The Zacks Earnings ESP model is presented as a quantitative tool for identifying stocks with a high probability of delivering a positive earnings surprise, based on the most recent analyst revisions. The model's historical back-testing claims a 70% success rate in predicting positive surprises and an average annual return of 28.3% when a positive ESP is combined with a Zacks Rank of #3 (Hold) or better. This screen currently flags two finance stocks. American Express (AXP), with a #3 (Hold) rating, shows a positive ESP of +0.48% just eight days prior to its July 18, 2025, earnings release, stemming from a Most Accurate Estimate of $3.87 per share versus a consensus of $3.85. Similarly, Bank of Nova Scotia (BNS), also rated #3 (Hold), exhibits a more pronounced positive ESP of +1.56% ahead of its August 26, 2025 report, with its Most Accurate Estimate at $1.30 against a consensus of $1.28. While the neutral 'Hold' rating for both companies suggests an expectation of in-line market performance, the positive ESP signals a statistically significant potential for them to exceed earnings expectations in their upcoming quarterly announcements.

Key Decisions for Investors

• Investors focused on short-term catalysts may consider initiating tactical long positions in AXP and BNS ahead of their respective earnings reports to capitalize on the potential for a positive price reaction to an earnings beat.
• Given that both stocks carry a neutral Zacks Rank #3 (Hold), these signals should be primarily viewed as indicators for an event-driven trade rather than a change in the long-term fundamental outlook, which still warrants separate due diligence.
• When choosing between the two, investors should note that American Express offers a more immediate catalyst, while Bank of Nova Scotia presents a stronger ESP signal but with a more distant reporting date.