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 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 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.

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.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 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 Centene?

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. Centene (CNC Quick QuoteCNC - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $2.45 a share, just 14 days from its upcoming earnings release on April 25, 2025.

By taking the percentage difference between the $2.45 Most Accurate Estimate and the $2.32 Zacks Consensus Estimate, Centene has an Earnings ESP of +5.46%. Investors should also know that CNC is one of a large group 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.

CNC is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Agilent Technologies (A Quick QuoteA - Free Report) as well.

Agilent Technologies is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on June 4, 2025. A's Most Accurate Estimate sits at $1.29 a share 54 days from its next earnings release.

For Agilent Technologies, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.27 is +1.07%.

CNC and A'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 >>