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.

2 Stocks to Add to Your Watchlist

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 final step today is to look at a stock that meets our ESP qualifications. Moderna (MRNA) earns a Zacks Rank #3 23 days from its next quarterly earnings release on November 7, 2024, and its Most Accurate Estimate comes in at -$1.80 a share.

By taking the percentage difference between the -$1.80 Most Accurate Estimate and the -$1.84 Zacks Consensus Estimate, Moderna has an Earnings ESP of 2.4%.

MRNA is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Tactile Systems Technology (TCMD) as well.

Tactile Systems Technology is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 4, 2024. TCMD's Most Accurate Estimate sits at $0.19 a share 20 days from its next earnings release.

The Zacks Consensus Estimate for Tactile Systems Technology is $0.18, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 7.04%.

Because both stocks hold a positive Earnings ESP, MRNA and TCMD could potentially post earnings beats in their next reports.

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 >>

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