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.

The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.

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 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.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

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 ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Analog Devices?

The final step today is to look at a stock that meets our ESP qualifications. Analog Devices (ADI Quick QuoteADI - Free Report) earns a #3 (Hold) 12 days from its next quarterly earnings release on August 20, 2025, and its Most Accurate Estimate comes in at $1.94 a share.

ADI has an Earnings ESP figure of +0.72%, which, as explained above, is calculated by taking the percentage difference between the $1.94 Most Accurate Estimate and the Zacks Consensus Estimate of $1.93. Analog Devices 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.

ADI is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Jabil (JBL Quick QuoteJBL - Free Report) .

Slated to report earnings on September 25, 2025, Jabil holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $3.03 a share 48 days from its next quarterly update.

Jabil's Earnings ESP figure currently stands at +3.68% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.92.

Because both stocks hold a positive Earnings ESP, ADI and JBL 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 >>