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 United Rentals?

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. United Rentals (URI Quick QuoteURI - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $11.12 a share 30 days away from its upcoming earnings release on July 23, 2025.

By taking the percentage difference between the $11.12 Most Accurate Estimate and the $10.59 Zacks Consensus Estimate, United Rentals has an Earnings ESP of +4.97%. Investors should also know that URI 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.

URI is one of just a large database of Construction stocks with positive ESPs. Another solid-looking stock is Martin Marietta (MLM Quick QuoteMLM - Free Report) .

Martin Marietta, 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 $5.67 a share, and MLM is 52 days out from its next earnings report.

For Martin Marietta, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.50 is +3.04%.

Because both stocks hold a positive Earnings ESP, URI and MLM 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 >>