Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

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 Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information. With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure.

The final step today is to look at a stock that meets our ESP qualifications. Steel Dynamics (STLD) earns a Zacks Rank #3 29 days from its next quarterly earnings release on July 19, 2023, and its Most Accurate Estimate comes in at $5.11 a share.

By taking the percentage difference between the $5.11 Most Accurate Estimate and the $5.10 Zacks Consensus Estimate, Steel Dynamics has an Earnings ESP of 0.2%.

STLD is one of just a large database of Basic Materials stocks with positive ESPs. Another solid-looking stock is Southern Copper (SCCO).

Southern Copper, which is readying to report earnings on July 25, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.03 a share, and SCCO is 35 days out from its next earnings report.

Southern Copper's Earnings ESP figure currently stands at 10.36% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.93.

Because both stocks hold a positive Earnings ESP, STLD and SCCO 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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Steel Dynamics, Inc. (STLD) : Free Stock Analysis Report

Southern Copper Corporation (SCCO) : Free Stock Analysis Report

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