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

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

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, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

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. Kroger (KR) holds a Zacks Rank #3 at the moment and its Most Accurate Estimate comes in at $1.34 a share one day away from its upcoming earnings release on June 20, 2024.

Kroger's Earnings ESP sits at 0.83%, which, as explained above, is calculated by taking the percentage difference between the $1.34 Most Accurate Estimate and the Zacks Consensus Estimate of $1.33.

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

Slated to report earnings on July 17, 2024, Carvana holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0 a share 28 days from its next quarterly update.

The Zacks Consensus Estimate for Carvana is -$0.02, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 100%.

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

The Kroger Co. (KR) : Free Stock Analysis Report

Carvana Co. (CVNA) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research