Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

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, 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.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% 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 Lululemon?

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. Lululemon (LULU Quick QuoteLULU - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.70 a share, just 14 days from its upcoming earnings release on June 4, 2026.

By taking the percentage difference between the $1.70 Most Accurate Estimate and the $1.69 Zacks Consensus Estimate, Lululemon has an Earnings ESP of +0.47%. Investors should also know that LULU 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.

LULU is just one of a large group of Consumer Discretionary stocks with a positive ESP figure. Las Vegas Sands (LVS Quick QuoteLVS - Free Report) is another qualifying stock you may want to consider.

Las Vegas Sands is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on July 22, 2026. LVS' Most Accurate Estimate sits at $0.79 a share 62 days from its next earnings release.

Las Vegas Sands' Earnings ESP figure currently stands at +0.90% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.78.

Because both stocks hold a positive Earnings ESP, LULU and LVS could potentially post earnings beats in their next reports.

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 >>