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, 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 even higher.

2 Stocks to Add to Your Watchlist

The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Air Products and Chemicals (APD) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $3.50 a share 17 days away from its upcoming earnings release on November 7, 2024.

By taking the percentage difference between the $3.50 Most Accurate Estimate and the $3.44 Zacks Consensus Estimate, Air Products and Chemicals has an Earnings ESP of 1.63%.

APD is just one of a large group of Basic Materials stocks with a positive ESP figure. B2Gold (BTG) is another qualifying stock you may want to consider.

B2Gold is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on November 6, 2024. BTG's Most Accurate Estimate sits at $0.07 a share 16 days from its next earnings release.

The Zacks Consensus Estimate for B2Gold is $0.05, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 31.25%.

Because both stocks hold a positive Earnings ESP, APD and BTG 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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