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.

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 #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 Dow Inc.?

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. Dow Inc. (DOW Quick QuoteDOW - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at -$0.29 a share 30 days away from its upcoming earnings release on April 23, 2026.

DOW has an Earnings ESP figure of +16.41%, which, as explained above, is calculated by taking the percentage difference between the -$0.29 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.34. Dow Inc. 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.

DOW is part of a big group of Basic Materials stocks that boast a positive ESP, and investors may want to take a look at Newmont Corporation (NEM Quick QuoteNEM - Free Report) as well.

Newmont Corporation is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on April 22, 2026. NEM's Most Accurate Estimate sits at $2.26 a share 29 days from its next earnings release.

Newmont Corporation's Earnings ESP figure currently stands at +9.31% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.07.

DOW and NEM'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 >>