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.

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.

The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

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 ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Under Armour?

The final step today is to look at a stock that meets our ESP qualifications. Under Armour (UAA Quick QuoteUAA - Free Report) earns a #3 (Hold) one day from its next quarterly earnings release on May 12, 2026, and its Most Accurate Estimate comes in at -$0.02 a share.

By taking the percentage difference between the -$0.02 Most Accurate Estimate and the -$0.03 Zacks Consensus Estimate, Under Armour has an Earnings ESP of +25.00%. Investors should also know that UAA 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.

UAA is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. PENN Entertainment (PENN Quick QuotePENN - Free Report) is another qualifying stock you may want to consider.

PENN Entertainment is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 6, 2026. PENN's Most Accurate Estimate sits at $0.33 a share 87 days from its next earnings release.

The Zacks Consensus Estimate for PENN Entertainment is $0.32, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.48%.

UAA and PENN'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 >>