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.

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 Devon Energy?

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. Devon Energy (DVN Quick QuoteDVN - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $1.26 a share 14 days away from its upcoming earnings release on November 5, 2026.

DVN has an Earnings ESP figure of +3.63%, which, as explained above, is calculated by taking the percentage difference between the $1.26 Most Accurate Estimate and the Zacks Consensus Estimate of $1.22. Devon Energy 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.

DVN 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 SolarEdge Technologies (SEDG Quick QuoteSEDG - Free Report) as well.

SolarEdge Technologies is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 4, 2026. SEDG's Most Accurate Estimate sits at $0.06 a share 13 days from its next earnings release.

The Zacks Consensus Estimate for SolarEdge Technologies is $0.02, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +198.04%.

Because both stocks hold a positive Earnings ESP, DVN and SEDG 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 >>