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These 2 Retail-Wholesale Stocks Could Beat Earnings: Why They Should Be on Your Radar

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.

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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. Carvana (CVNA) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at $0.07 a share, just 30 days from its upcoming earnings release on July 17, 2024.

Carvana's Earnings ESP sits at 367.64%, which, as explained above, is calculated by taking the percentage difference between the $0.07 Most Accurate Estimate and the Zacks Consensus Estimate of -$0.02.

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

Alibaba is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on August 8, 2024. BABA's Most Accurate Estimate sits at $2.37 a share 52 days from its next earnings release.

The Zacks Consensus Estimate for Alibaba is $2.24, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 5.74%.

Because both stocks hold a positive Earnings ESP, CVNA and BABA 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

Carvana Co. (CVNA) : Free Stock Analysis Report

Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research