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 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. Foot Locker (FL) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.39 a share three days away from its upcoming earnings release on May 20, 2022.

Foot Locker's Earnings ESP sits at 0.54%, which, as explained above, is calculated by taking the percentage difference between the $1.39 Most Accurate Estimate and the Zacks Consensus Estimate of $1.38.

FL is one of just a large database of Retail-Wholesale stocks with positive ESPs. Another solid-looking stock is Bed Bath & Beyond (BBBY).

Slated to report earnings on June 29, 2022, Bed Bath & Beyond holds a #5 (Strong Sell) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$1.12 a share 43 days from its next quarterly update.

Bed Bath & Beyond's Earnings ESP figure currently stands at 10.8% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$1.25.

Because both stocks hold a positive Earnings ESP, FL and BBBY 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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Foot Locker, Inc. (FL) : Free Stock Analysis Report
 
Bed Bath & Beyond Inc. (BBBY) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.