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 final step today is to look at a stock that meets our ESP qualifications. Pacific Biosciences of California (PACB) earns a Zacks Rank #3 30 days from its next quarterly earnings release on February 20, 2025, and its Most Accurate Estimate comes in at -$0.18 a share.

PACB has an Earnings ESP figure of 8.86%, which, as explained above, is calculated by taking the percentage difference between the -$0.18 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.20.

PACB is part of a big group of Medical stocks that boast a positive ESP, and investors may want to take a look at Inspire Medical Systems (INSP) as well.

Inspire Medical Systems, which is readying to report earnings on February 10, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.78 a share, and INSP is 20 days out from its next earnings report.

The Zacks Consensus Estimate for Inspire Medical Systems is $0.74, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 5.88%.

PACB and INSP'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 >>

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

Pacific Biosciences of California, Inc. (PACB) : Free Stock Analysis Report

Inspire Medical Systems, Inc. (INSP) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research