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How to Find Strong Retail-Wholesale Stocks Slated for Positive Earnings Surprises

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.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these 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.

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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. Williams-Sonoma (WSM) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.43 a share, just nine days from its upcoming earnings release on May 24, 2023.

Williams-Sonoma's Earnings ESP sits at 0.54%, which, as explained above, is calculated by taking the percentage difference between the $2.43 Most Accurate Estimate and the Zacks Consensus Estimate of $2.41.

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

Yum Brands, which is readying to report earnings on August 2, 2023, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $1.22 a share, and YUM is 79 days out from its next earnings report.

For Yum Brands, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $1.22 is 0.37%.

WSM and YUM's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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

Williams-Sonoma, Inc. (WSM) : Free Stock Analysis Report

Yum! Brands, Inc. (YUM) : Free Stock Analysis Report

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Zacks Investment Research