Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

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.

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.

Stocks with a ranking of #3 (Hold), or 60% of all stocks covered by the Zacks Rank, are expected to perform in-line with the broader market. Stocks with rankings of #2 (Buy) and #1 (Strong Buy), 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 Phillips 66?

The final step today is to look at a stock that meets our ESP qualifications. Phillips 66 (PSX Quick QuotePSX - Free Report) earns a #1 (Strong Buy) 14 days from its next quarterly earnings release on October 28, 2026, and its Most Accurate Estimate comes in at $11.92 a share.

By taking the percentage difference between the $11.92 Most Accurate Estimate and the $10.5 Zacks Consensus Estimate, Phillips 66 has an Earnings ESP of +13.53%. Investors should also know that PSX 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.

PSX is part of a big group of Oils and Energy stocks that boast a positive ESP, and investors may want to take a look at Sunrun (RUN Quick QuoteRUN - Free Report) as well.

Sunrun is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 4, 2026. RUN's Most Accurate Estimate sits at $0.37 a share 21 days from its next earnings release.

For Sunrun, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.12 is +195.17%.

PSX and RUN'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 >>