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. Ecolab (ECL) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.87 a share, just eight days from its upcoming earnings release on October 29, 2024.

ECL has an Earnings ESP figure of 2.99%, which, as explained above, is calculated by taking the percentage difference between the $1.87 Most Accurate Estimate and the Zacks Consensus Estimate of $1.82.

ECL is just one of a large group of Basic Materials stocks with a positive ESP figure. United States Steel (X) is another qualifying stock you may want to consider.

United States Steel is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 31, 2024. X's Most Accurate Estimate sits at $0.46 a share 10 days from its next earnings release.

The Zacks Consensus Estimate for United States Steel is $0.46, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.22%.

ECL and X'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 >>