Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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.

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 XP Inc.A?

The final step today is to look at a stock that meets our ESP qualifications. XP Inc.A (XP Quick QuoteXP - Free Report) earns a #3 (Hold) 13 days from its next quarterly earnings release on November 16, 2026, and its Most Accurate Estimate comes in at $0.54 a share.

By taking the percentage difference between the $0.54 Most Accurate Estimate and the $0.53 Zacks Consensus Estimate, XP Inc.A has an Earnings ESP of +1.25%. Investors should also know that XP 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.

XP is just one of a large group of Finance stocks with a positive ESP figure. American Tower (AMT Quick QuoteAMT - Free Report) is another qualifying stock you may want to consider.

American Tower, which is readying to report earnings on February 23, 2027, sits at a Zacks Rank #3 (Hold) right now. Its Most Accurate Estimate is currently $2.76 a share, and AMT is 112 days out from its next earnings report.

American Tower's Earnings ESP figure currently stands at +0.85% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.74.

XP and AMT'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 >>