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.

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.

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.

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 Union Pacific?

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. Union Pacific (UNP Quick QuoteUNP - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $3.45 a share, just 14 days from its upcoming earnings release on October 22, 2026.

Union Pacific's Earnings ESP sits at +0.29%, which, as explained above, is calculated by taking the percentage difference between the $3.45 Most Accurate Estimate and the Zacks Consensus Estimate of $3.44. UNP is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

UNP is just one of a large group of Transportation stocks with a positive ESP figure. Alaska Air Group (ALK Quick QuoteALK - Free Report) is another qualifying stock you may want to consider.

Alaska Air Group, which is readying to report earnings on October 20, 2026, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $0.39 a share, and ALK is 12 days out from its next earnings report.

Alaska Air Group's Earnings ESP figure currently stands at +5.59% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.37.

UNP and ALK's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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 >>