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 ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.

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.

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 system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% 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 Booking Holdings?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Booking Holdings (BKNG Quick QuoteBKNG - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $17.72 a share, just six days from its upcoming earnings release on April 29, 2025.

Booking Holdings' Earnings ESP sits at +2.89%, which, as explained above, is calculated by taking the percentage difference between the $17.72 Most Accurate Estimate and the Zacks Consensus Estimate of $17.22. BKNG is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

BKNG is just one of a large group of Retail and Wholesale stocks with a positive ESP figure. Dutch Bros (BROS Quick QuoteBROS - Free Report) is another qualifying stock you may want to consider.

Dutch Bros, which is readying to report earnings on May 6, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.11 a share, and BROS is 13 days out from its next earnings report.

For Dutch Bros, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.10 is +2.81%.

BKNG and BROS' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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 >>