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.

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 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.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

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 Plains All American Pipeline?

The final step today is to look at a stock that meets our ESP qualifications. Plains All American Pipeline (PAA Quick QuotePAA - Free Report) earns a #2 (Buy) 16 days from its next quarterly earnings release on February 6, 2026, and its Most Accurate Estimate comes in at $0.56 a share.

By taking the percentage difference between the $0.56 Most Accurate Estimate and the $0.49 Zacks Consensus Estimate, Plains All American Pipeline has an Earnings ESP of +14.29%. Investors should also know that PAA 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.

PAA 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 Energy Transfer LP (ET Quick QuoteET - Free Report) as well.

Slated to report earnings on February 17, 2026, Energy Transfer LP holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.36 a share 27 days from its next quarterly update.

The Zacks Consensus Estimate for Energy Transfer LP is $0.34, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +4.86%.

PAA and ET'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 >>