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.

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 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.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

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 Allison Transmission?

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. Allison Transmission (ALSN Quick QuoteALSN - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.19 a share, just 10 days from its upcoming earnings release on May 4, 2026.

ALSN has an Earnings ESP figure of +25.84%, which, as explained above, is calculated by taking the percentage difference between the $3.19 Most Accurate Estimate and the Zacks Consensus Estimate of $2.54. Allison Transmission 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.

ALSN is one of just a large database of Auto, Tires and Trucks stocks with positive ESPs. Another solid-looking stock is Lucid Group (LCID Quick QuoteLCID - Free Report) .

Lucid Group, which is readying to report earnings on May 5, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently -$2.66 a share, and LCID is 11 days out from its next earnings report.

Lucid Group's Earnings ESP figure currently stands at +2.51% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$2.72.

ALSN and LCID'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 >>