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.

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.

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. Ares Capital (ARCC) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.62 a share, just 27 days from its upcoming earnings release on October 22, 2024.

Ares Capital's Earnings ESP sits at 5.28%, which, as explained above, is calculated by taking the percentage difference between the $0.62 Most Accurate Estimate and the Zacks Consensus Estimate of $0.59.

ARCC is just one of a large group of Finance stocks with a positive ESP figure. Banco Macro (BMA) is another qualifying stock you may want to consider.

Banco Macro, which is readying to report earnings on November 27, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.82 a share, and BMA is 63 days out from its next earnings report.

The Zacks Consensus Estimate for Banco Macro is $2.64, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 7.02%.

ARCC and BMA's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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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