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.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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, 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.

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 Emerson Electric?

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. Emerson Electric (EMR Quick QuoteEMR - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.86 a share, just 29 days from its upcoming earnings release on November 4, 2026.

By taking the percentage difference between the $1.86 Most Accurate Estimate and the $1.84 Zacks Consensus Estimate, Emerson Electric has an Earnings ESP of +1.27%. Investors should also know that EMR 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.

EMR is one of just a large database of Industrial Products stocks with positive ESPs. Another solid-looking stock is Stanley Black & Decker (SWK Quick QuoteSWK - Free Report) .

Stanley Black & Decker is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 4, 2026. SWK's Most Accurate Estimate sits at $1.59 a share 29 days from its next earnings release.

Stanley Black & Decker's Earnings ESP figure currently stands at +2.55% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.55.

Because both stocks hold a positive Earnings ESP, EMR and SWK 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 >>