Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

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 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. Lowe's (LOW) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $1.73 a share, just 21 days from its upcoming earnings release on March 6, 2024.

Lowe's' Earnings ESP sits at 2.84%, which, as explained above, is calculated by taking the percentage difference between the $1.73 Most Accurate Estimate and the Zacks Consensus Estimate of $1.68.

LOW is just one of a large group of Retail-Wholesale stocks with a positive ESP figure. O'Reilly Automotive (ORLY) is another qualifying stock you may want to consider.

O'Reilly Automotive, which is readying to report earnings on April 24, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $9.22 a share, and ORLY is 70 days out from its next earnings report.

The Zacks Consensus Estimate for O'Reilly Automotive is $9.21, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.02%.

Because both stocks hold a positive Earnings ESP, LOW and ORLY 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 >>