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.

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 e.l.f. Beauty?

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. e.l.f. Beauty (ELF Quick QuoteELF - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $0.63 a share, just 28 days from its upcoming earnings release on November 4, 2026.

ELF has an Earnings ESP figure of +6.10%, which, as explained above, is calculated by taking the percentage difference between the $0.63 Most Accurate Estimate and the Zacks Consensus Estimate of $0.59. e.l.f. Beauty 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.

ELF is part of a big group of Consumer Staples stocks that boast a positive ESP, and investors may want to take a look at Sysco (SYY Quick QuoteSYY - Free Report) as well.

Slated to report earnings on October 27, 2026, Sysco holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $1.19 a share 20 days from its next quarterly update.

The Zacks Consensus Estimate for Sysco is $1.16, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +2.89%.

ELF and SYY'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 >>