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.

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.

The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.

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 T. Rowe Price?

The final step today is to look at a stock that meets our ESP qualifications. T. Rowe Price (TROW Quick QuoteTROW - Free Report) earns a #3 (Hold) nine days from its next quarterly earnings release on October 29, 2026, and its Most Accurate Estimate comes in at $2.60 a share.

T. Rowe Price's Earnings ESP sits at +0.42%, which, as explained above, is calculated by taking the percentage difference between the $2.60 Most Accurate Estimate and the Zacks Consensus Estimate of $2.59. TROW 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.

TROW is just one of a large group of Finance stocks with a positive ESP figure. Palomar (PLMR Quick QuotePLMR - Free Report) is another qualifying stock you may want to consider.

Slated to report earnings on November 5, 2026, Palomar holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $2.69 a share 16 days from its next quarterly update.

The Zacks Consensus Estimate for Palomar is $2.64, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.89%.

Because both stocks hold a positive Earnings ESP, TROW and PLMR 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 >>