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.

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.

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.

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. Paramount Global-B (PARA) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.35 a share, just 28 days from its upcoming earnings release on November 8, 2024.

Paramount Global-B's Earnings ESP sits at 93.26%, which, as explained above, is calculated by taking the percentage difference between the $0.35 Most Accurate Estimate and the Zacks Consensus Estimate of $0.18.

PARA is part of a big group of Consumer Discretionary stocks that boast a positive ESP, and investors may want to take a look at Sirius XM (SIRI) as well.

Slated to report earnings on October 31, 2024, Sirius XM holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.88 a share 20 days from its next quarterly update.

The Zacks Consensus Estimate for Sirius XM is $0.83, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 6.18%.

Because both stocks hold a positive Earnings ESP, PARA and SIRI 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 >>