Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

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.

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 APA?

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. APA (APA Quick QuoteAPA - Free Report) holds a #3 (Hold) at the moment and its Most Accurate Estimate comes in at $1.00 a share 28 days away from its upcoming earnings release on May 6, 2026.

APA's Earnings ESP sits at +10.75%, which, as explained above, is calculated by taking the percentage difference between the $1.00 Most Accurate Estimate and the Zacks Consensus Estimate of $0.91. APA 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.

APA is just one of a large group of Oils and Energy stocks with a positive ESP figure. Matador Resources (MTDR Quick QuoteMTDR - Free Report) is another qualifying stock you may want to consider.

Matador Resources, which is readying to report earnings on April 22, 2026, sits at a Zacks Rank #2 (Buy) right now. Its Most Accurate Estimate is currently $1.58 a share, and MTDR is 14 days out from its next earnings report.

Matador Resources' Earnings ESP figure currently stands at +15.49% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.37.

APA and MTDR'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 >>