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.

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.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

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.

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.

When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 DLocal?

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. DLocal (DLO Quick QuoteDLO - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.14 a share, just 22 days from its upcoming earnings release on August 13, 2025.

DLO has an Earnings ESP figure of +5.00%, which, as explained above, is calculated by taking the percentage difference between the $0.14 Most Accurate Estimate and the Zacks Consensus Estimate of $0.13. DLocal 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.

DLO is one of just a large database of Business Services stocks with positive ESPs. Another solid-looking stock is Visa (V Quick QuoteV - Free Report) .

Slated to report earnings on July 29, 2025, Visa holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $2.87 a share seven days from its next quarterly update.

Visa's Earnings ESP figure currently stands at +0.39% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.86.

DLO and V'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 >>