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.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.

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.

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 #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 Arch Capital Group?

The final step today is to look at a stock that meets our ESP qualifications. Arch Capital Group (ACGL Quick QuoteACGL - Free Report) earns a #3 (Hold) 22 days from its next quarterly earnings release on October 27, 2026, and its Most Accurate Estimate comes in at $2.39 a share.

ACGL has an Earnings ESP figure of +24.57%, which, as explained above, is calculated by taking the percentage difference between the $2.39 Most Accurate Estimate and the Zacks Consensus Estimate of $1.92. Arch Capital Group 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.

ACGL is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is CME Group (CME Quick QuoteCME - Free Report) .

CME Group, which is readying to report earnings on October 21, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $2.94 a share, and CME is 16 days out from its next earnings report.

For CME Group, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.93 is +0.26%.

ACGL and CME'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 >>