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.

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 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.

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 KLA?

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. KLA (KLAC Quick QuoteKLAC - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $9.22 a share, just 30 days from its upcoming earnings release on April 29, 2026.

By taking the percentage difference between the $9.22 Most Accurate Estimate and the $9.16 Zacks Consensus Estimate, KLA has an Earnings ESP of +0.62%. Investors should also know that KLAC 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.

KLAC is just one of a large group of Computer and Technology stocks with a positive ESP figure. Zoom Communications (ZM Quick QuoteZM - Free Report) is another qualifying stock you may want to consider.

Zoom Communications, which is readying to report earnings on May 20, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $1.42 a share, and ZM is 51 days out from its next earnings report.

Zoom Communications' Earnings ESP figure currently stands at +0.09% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.41.

KLAC and ZM'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 >>