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.

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.

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. Etsy (ETSY) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $0.64 a share, just 22 days from its upcoming earnings release on May 7, 2025.

ETSY has an Earnings ESP figure of 11.37%, which, as explained above, is calculated by taking the percentage difference between the $0.64 Most Accurate Estimate and the Zacks Consensus Estimate of $0.57.

ETSY is part of a big group of Retail-Wholesale stocks that boast a positive ESP, and investors may want to take a look at MercadoLibre (MELI) as well.

MercadoLibre, which is readying to report earnings on May 1, 2025, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $8.19 a share, and MELI is 16 days out from its next earnings report.

The Zacks Consensus Estimate for MercadoLibre is $7.52, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 8.86%.

ETSY and MELI'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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Etsy, Inc. (ETSY) : Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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