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.

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.

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.

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 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 Hecla Mining?

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. Hecla Mining (HL Quick QuoteHL - Free Report) earns a #1 (Strong Buy) right now and its Most Accurate Estimate sits at $0.06 a share, just 10 days from its upcoming earnings release on February 13, 2025.

By taking the percentage difference between the $0.06 Most Accurate Estimate and the $0.04 Zacks Consensus Estimate, Hecla Mining has an Earnings ESP of +50%. Investors should also know that HL 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.

HL is just one of a large group of Basic Materials stocks with a positive ESP figure. Lithium Americas Corp. (LAC Quick QuoteLAC - Free Report) is another qualifying stock you may want to consider.

Slated to report earnings on March 21, 2025, Lithium Americas Corp. holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.01 a share 46 days from its next quarterly update.

Lithium Americas Corp.'s Earnings ESP figure currently stands at +42.6% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.02.

HL and LAC'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 >>