Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

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 Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

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. United States Steel (X) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $0.46 a share 16 days away from its upcoming earnings release on October 31, 2024.

X has an Earnings ESP figure of 3.8%, which, as explained above, is calculated by taking the percentage difference between the $0.46 Most Accurate Estimate and the Zacks Consensus Estimate of $0.44.

X is just one of a large group of Basic Materials stocks with a positive ESP figure. DuPont de Nemours (DD) is another qualifying stock you may want to consider.

DuPont de Nemours is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on November 6, 2024. DD's Most Accurate Estimate sits at $1.05 a share 22 days from its next earnings release.

DuPont de Nemours' Earnings ESP figure currently stands at 1% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.03.

X and DD's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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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United States Steel Corporation (X) : Free Stock Analysis Report

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