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.

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 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.

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 Agnico Eagle Mines?

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. Agnico Eagle Mines (AEM Quick QuoteAEM - Free Report) holds a #1 (Strong Buy) at the moment and its Most Accurate Estimate comes in at $1.74 a share 28 days away from its upcoming earnings release on July 30, 2025.

By taking the percentage difference between the $1.74 Most Accurate Estimate and the $1.61 Zacks Consensus Estimate, Agnico Eagle Mines has an Earnings ESP of +7.76%. Investors should also know that AEM 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.

AEM is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Linde (LIN Quick QuoteLIN - Free Report) .

Linde is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 1, 2025. LIN's Most Accurate Estimate sits at $4.05 a share 30 days from its next earnings release.

Linde's Earnings ESP figure currently stands at +0.5% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.03.

AEM and LIN's 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 >>