Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

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.

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 is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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 Applied Materials?

The final step today is to look at a stock that meets our ESP qualifications. Applied Materials (AMAT Quick QuoteAMAT - Free Report) earns a #3 (Hold) six days from its next quarterly earnings release on May 15, 2025, and its Most Accurate Estimate comes in at $2.35 a share.

AMAT has an Earnings ESP figure of +1.94%, which, as explained above, is calculated by taking the percentage difference between the $2.35 Most Accurate Estimate and the Zacks Consensus Estimate of $2.31. Applied Materials 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.

AMAT is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Amphenol (APH Quick QuoteAPH - Free Report) as well.

Amphenol is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on July 23, 2025. APH's Most Accurate Estimate sits at $0.66 a share 75 days from its next earnings release.

For Amphenol, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.64 is +2.93%.

Because both stocks hold a positive Earnings ESP, AMAT and APH could potentially post earnings beats in their next reports.

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 >>