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 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. Union Pacific (UNP) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $2.80 a share 24 days away from its upcoming earnings release on October 17, 2024.

By taking the percentage difference between the $2.80 Most Accurate Estimate and the $2.78 Zacks Consensus Estimate, Union Pacific has an Earnings ESP of 0.67%.

UNP is part of a big group of Transportation stocks that boast a positive ESP, and investors may want to take a look at American Airlines (AAL) as well.

Slated to report earnings on October 17, 2024, American Airlines holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.32 a share 24 days from its next quarterly update.

American Airlines' Earnings ESP figure currently stands at 674.82% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.04.

Because both stocks hold a positive Earnings ESP, UNP and AAL could potentially post earnings beats in their next reports.

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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Union Pacific Corporation (UNP) : Free Stock Analysis Report

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