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.

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.

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 #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 Parker-Hannifin?

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. Parker-Hannifin (PH Quick QuotePH - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $8.16 a share, just 30 days from its upcoming earnings release on November 5, 2026.

By taking the percentage difference between the $8.16 Most Accurate Estimate and the $8.1 Zacks Consensus Estimate, Parker-Hannifin has an Earnings ESP of +0.75%. Investors should also know that PH 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.

PH is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is Alcoa (AA Quick QuoteAA - Free Report) .

Alcoa, which is readying to report earnings on October 15, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $1.67 a share, and AA is nine days out from its next earnings report.

Alcoa's Earnings ESP figure currently stands at +5.96% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.58.

Because both stocks hold a positive Earnings ESP, PH and AA 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 >>