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 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. Deere (DE) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $3.92 a share 30 days away from its upcoming earnings release on November 27, 2024.

By taking the percentage difference between the $3.92 Most Accurate Estimate and the $3.90 Zacks Consensus Estimate, Deere has an Earnings ESP of 0.38%.

DE is just one of a large group of Industrial Products stocks with a positive ESP figure. Emerson Electric (EMR) is another qualifying stock you may want to consider.

Emerson Electric, which is readying to report earnings on November 5, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.48 a share, and EMR is eight days out from its next earnings report.

The Zacks Consensus Estimate for Emerson Electric is $1.47, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.85%.

Because both stocks hold a positive Earnings ESP, DE and EMR 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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report