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.

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.

Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% 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 Exact Sciences?

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. Exact Sciences (EXAS Quick QuoteEXAS - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at -$0.12 a share, just seven days from its upcoming earnings release on November 5, 2024.

EXAS has an Earnings ESP figure of +39.5%, which, as explained above, is calculated by taking the percentage difference between the -$0.12 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.20. Exact Sciences 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.

EXAS is one of just a large database of Medical stocks with positive ESPs. Another solid-looking stock is Boston Scientific (BSX Quick QuoteBSX - Free Report) .

Boston Scientific, which is readying to report earnings on January 29, 2025, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $0.65 a share, and BSX is 92 days out from its next earnings report.

The Zacks Consensus Estimate for Boston Scientific is $0.65, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.15%.

EXAS and BSX'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 >>