Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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.

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.

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 #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 Seagate?

The final step today is to look at a stock that meets our ESP qualifications. Seagate (STX Quick QuoteSTX - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on October 28, 2025, and its Most Accurate Estimate comes in at $2.45 a share.

By taking the percentage difference between the $2.45 Most Accurate Estimate and the $2.34 Zacks Consensus Estimate, Seagate has an Earnings ESP of +4.59%. Investors should also know that STX 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.

STX is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is SAP (SAP Quick QuoteSAP - Free Report) .

Slated to report earnings on October 22, 2025, SAP holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $1.77 a share 23 days from its next quarterly update.

The Zacks Consensus Estimate for SAP is $1.70, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +4.12%.

Because both stocks hold a positive Earnings ESP, STX and SAP 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 >>