Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

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 is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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 Western Midstream?

The final step today is to look at a stock that meets our ESP qualifications. Western Midstream (WES Quick QuoteWES - Free Report) earns a #3 (Hold) 29 days from its next quarterly earnings release on November 5, 2025, and its Most Accurate Estimate comes in at $0.94 a share.

By taking the percentage difference between the $0.94 Most Accurate Estimate and the $0.87 Zacks Consensus Estimate, Western Midstream has an Earnings ESP of +8.05%. Investors should also know that WES 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.

WES is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Enphase Energy (ENPH Quick QuoteENPH - Free Report) as well.

Enphase Energy, which is readying to report earnings on October 28, 2025, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $0.64 a share, and ENPH is 21 days out from its next earnings report.

The Zacks Consensus Estimate for Enphase Energy is $0.60, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +6.37%.

WES and ENPH'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 >>