These 2 Basic Materials Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks highlights its proprietary Earnings ESP (Expected Surprise Prediction) methodology, which identifies stocks likely to exceed quarterly earnings estimates by comparing the most accurate, recent analyst revisions against the consensus. This system, when combined with a Zacks Rank of #3 (Hold) or better and a positive ESP, has historically resulted in a 70% positive surprise rate and delivered an average 28.3% annual return over a 10-year backtest. The article specifically points to basic materials stocks Allegheny Technologies (ATI), with a +3.38% ESP, and Agnico Eagle Mines (AEM), with a +7.97% ESP, as examples poised for potential earnings beats ahead of their scheduled July 2025 reports.

Analysis

The analysis highlights a proprietary quantitative model, the Zacks Earnings ESP, which aims to predict positive earnings surprises by comparing the most recent analyst estimates to the consensus. The model's historical performance, based on a 10-year backtest, suggests that stocks with a Zacks Rank of #3 (Hold) or better and a positive ESP have delivered a positive earnings surprise 70% of the time, achieving an average annual return of 28.3%. The report identifies two specific Basic Materials stocks poised for potential earnings beats. Allegheny Technologies (ATI), with a Zacks Rank #2 (Buy), has a positive ESP of +3.38% based on a Most Accurate Estimate of $0.74 per share versus a consensus of $0.71. Agnico Eagle Mines (AEM) presents an even stronger signal with a Zacks Rank #1 (Strong Buy) and a more significant ESP of +7.97%, derived from a Most Accurate Estimate of $1.82 against a consensus of $1.69. Both companies are scheduled to report earnings at the end of July 2025, positioning them as immediate candidates for this event-driven strategy.

Key Decisions for Investors

• Investors with a higher risk tolerance for event-driven strategies could consider establishing long positions in Allegheny Technologies and Agnico Eagle Mines ahead of their late-July 2025 earnings releases to capitalize on the high probability of a positive earnings surprise.
• Given its superior Zacks Rank #1 (Strong Buy) and a more substantial Earnings ESP of +7.97%, Agnico Eagle Mines (AEM) represents a higher-conviction opportunity compared to Allegheny Technologies (ATI).
• While the model's 70% historical success rate is compelling, it is not a guarantee, and investors should be aware that a positive earnings surprise does not always result in a corresponding stock price increase; therefore, appropriate position sizing and risk management are crucial.