Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

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.

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, 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.

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 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 Lyft?

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. Lyft (LYFT Quick QuoteLYFT - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.22 a share, just two days from its upcoming earnings release on May 8, 2025.

By taking the percentage difference between the $0.22 Most Accurate Estimate and the $0.20 Zacks Consensus Estimate, Lyft has an Earnings ESP of +10%. Investors should also know that LYFT 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.

LYFT is just one of a large group of Computer and Technology stocks with a positive ESP figure. Meta Platforms (META Quick QuoteMETA - Free Report) is another qualifying stock you may want to consider.

Slated to report earnings on July 30, 2025, Meta Platforms holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $5.85 a share 85 days from its next quarterly update.

The Zacks Consensus Estimate for Meta Platforms is $5.84, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +0.13%.

LYFT and META'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 >>