Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

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, 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.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

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.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.

Should You Consider American Eagle Outfitters?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. American Eagle Outfitters (AEO Quick QuoteAEO - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $0.12 a share 22 days away from its upcoming earnings release on June 4, 2025.

American Eagle Outfitters' Earnings ESP sits at +9.09%, which, as explained above, is calculated by taking the percentage difference between the $0.12 Most Accurate Estimate and the Zacks Consensus Estimate of $0.11. AEO 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.

AEO is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at Expedia (EXPE Quick QuoteEXPE - Free Report) as well.

Expedia, which is readying to report earnings on August 14, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $4.07 a share, and EXPE is 93 days out from its next earnings report.

For Expedia, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.04 is +0.93%.

Because both stocks hold a positive Earnings ESP, AEO and EXPE 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 >>