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.

The final step today is to look at a stock that meets our ESP qualifications. Boot Barn (BOOT) earns a Zacks Rank #3 21 days from its next quarterly earnings release on January 29, 2025, and its Most Accurate Estimate comes in at $2.05 a share.

Boot Barn's Earnings ESP sits at 0.43%, which, as explained above, is calculated by taking the percentage difference between the $2.05 Most Accurate Estimate and the Zacks Consensus Estimate of $2.04.

BOOT is just one of a large group of Retail-Wholesale stocks with a positive ESP figure. Costco (COST) is another qualifying stock you may want to consider.

Costco is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on March 6, 2025. COST's Most Accurate Estimate sits at $4.05 a share 57 days from its next earnings release.

Costco's Earnings ESP figure currently stands at 0.23% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $4.04.

BOOT and COST'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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