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.

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 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.

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 #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 Bank of America?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Bank of America (BAC Quick QuoteBAC - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $1.00 a share 30 days away from its upcoming earnings release on April 15, 2026.

BAC has an Earnings ESP figure of +1.01%, which, as explained above, is calculated by taking the percentage difference between the $1.00 Most Accurate Estimate and the Zacks Consensus Estimate of $0.99. Bank of America 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.

BAC is just one of a large group of Finance stocks with a positive ESP figure. Reinsurance Group (RGA Quick QuoteRGA - Free Report) is another qualifying stock you may want to consider.

Slated to report earnings on May 7, 2026, Reinsurance Group holds a #2 (Buy) ranking on the Zacks Rank, and its Most Accurate Estimate is $6.27 a share 52 days from its next quarterly update.

The Zacks Consensus Estimate for Reinsurance Group is $6.21, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.90%.

Because both stocks hold a positive Earnings ESP, BAC and RGA 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 >>