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.

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.

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.

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 MSCI?

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. MSCI (MSCI Quick QuoteMSCI - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $4.40 a share, just 21 days from its upcoming earnings release on October 28, 2025.

MSCI's Earnings ESP sits at +0.58%, which, as explained above, is calculated by taking the percentage difference between the $4.40 Most Accurate Estimate and the Zacks Consensus Estimate of $4.38. MSCI is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

MSCI is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Ally Financial (ALLY Quick QuoteALLY - Free Report) as well.

Ally Financial, which is readying to report earnings on October 17, 2025, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $1.03 a share, and ALLY is 10 days out from its next earnings report.

Ally Financial's Earnings ESP figure currently stands at +4.24% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.99.

Because both stocks hold a positive Earnings ESP, MSCI and ALLY 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 >>