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. Skyward Specialty Insurance (SKWD) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $0.84 a share one day away from its upcoming earnings release on May 1, 2025.

SKWD has an Earnings ESP figure of 8.15%, which, as explained above, is calculated by taking the percentage difference between the $0.84 Most Accurate Estimate and the Zacks Consensus Estimate of $0.78.

SKWD is part of a big group of Finance stocks that boast a positive ESP, and investors may want to take a look at Capital One (COF) as well.

Capital One, which is readying to report earnings on July 22, 2025, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $4.01 a share, and COF is 83 days out from its next earnings report.

Capital One's Earnings ESP figure currently stands at 2.77% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $3.90.

SKWD and COF'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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Skyward Specialty Insurance Group, Inc. (SKWD) : Free Stock Analysis Report

Capital One Financial Corporation (COF) : Free Stock Analysis Report

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

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