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.

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.

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.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

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 Progressive?

The final step today is to look at a stock that meets our ESP qualifications. Progressive (PGR Quick QuotePGR - Free Report) earns a #2 (Buy) 30 days from its next quarterly earnings release on January 22, 2025, and its Most Accurate Estimate comes in at $3.58 a share.

PGR has an Earnings ESP figure of +7.26%, which, as explained above, is calculated by taking the percentage difference between the $3.58 Most Accurate Estimate and the Zacks Consensus Estimate of $3.34. Progressive 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.

PGR is one of just a large database of Finance stocks with positive ESPs. Another solid-looking stock is Simon Property (SPG Quick QuoteSPG - Free Report) .

Simon Property is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 3, 2025. SPG's Most Accurate Estimate sits at $3.40 a share 42 days from its next earnings release.

For Simon Property, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.40 is +0.07%.

PGR and SPG'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 >>