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.

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 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 last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to look at a qualifying stock. Baker Hughes (BKR) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $0.64 a share 30 days away from its upcoming earnings release on January 30, 2025.

By taking the percentage difference between the $0.64 Most Accurate Estimate and the $0.63 Zacks Consensus Estimate, Baker Hughes has an Earnings ESP of 1.91%.

BKR is just one of a large group of Oils-Energy stocks with a positive ESP figure. Plains All American Pipeline (PAA) is another qualifying stock you may want to consider.

Slated to report earnings on February 14, 2025, Plains All American Pipeline holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.46 a share 45 days from its next quarterly update.

For Plains All American Pipeline, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.43 is 7.48%.

BKR and PAA'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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Baker Hughes Company (BKR) : Free Stock Analysis Report

Plains All American Pipeline, L.P. (PAA) : Free Stock Analysis Report

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