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.

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 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. Freshpet (FRPT) earns a Zacks Rank #1 four days from its next quarterly earnings release on November 4, 2024, and its Most Accurate Estimate comes in at $0.18 a share.

By taking the percentage difference between the $0.18 Most Accurate Estimate and the $0.16 Zacks Consensus Estimate, Freshpet has an Earnings ESP of 11.99%.

FRPT is one of just a large database of Consumer Staples stocks with positive ESPs. Another solid-looking stock is RH (RH).

RH, which is readying to report earnings on December 5, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $2.71 a share, and RH is 35 days out from its next earnings report.

The Zacks Consensus Estimate for RH is $2.68, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 1.31%.

FRPT and RH'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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Freshpet, Inc. (FRPT) : Free Stock Analysis Report

RH (RH) : Free Stock Analysis Report

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