Why Investors Need to Take Advantage of These 2 Consumer Staples Stocks Now

Zacks Investment Research highlights its proprietary Earnings ESP (Expected Surprise Prediction) tool, designed to identify potential positive earnings surprises by comparing the most accurate analyst estimate to the Zacks Consensus Estimate. The methodology, when combined with a Zacks Rank #3 (Hold) or better, has historically predicted positive earnings surprises 70% of the time, yielding average annual returns of 28.3% over a 10-year backtest. The article points to consumer staples stocks Mondelez (MDLZ), with a +4.04% ESP, and Ollie's Bargain Outlet (OLLI), with a +1.14% ESP, as current examples signaling potential upside surprises in their upcoming reports.

Analysis

The analysis highlights a quantitative strategy for identifying potential positive earnings surprises, utilizing the Zacks Earnings ESP (Expected Surprise Prediction) metric. This forward-looking indicator, which measures the percentage difference between the most recent analyst estimate and the consensus estimate, is presented as a historically effective tool. When combined with a Zacks Rank of #3 (Hold) or better, the methodology is reported to have successfully predicted positive earnings surprises 70% of the time, delivering an average annual return of 28.3% based on a 10-year backtest. Two consumer staples stocks are identified as currently meeting these criteria. Mondelez (MDLZ) exhibits a strong signal with a Zacks Rank of #2 (Buy) and a positive ESP of +4.04%, derived from a Most Accurate Estimate of $0.70 versus a consensus of $0.67 ahead of its July 29 earnings release. Ollie's Bargain Outlet (OLLI) presents a more modest signal with a Zacks Rank of #3 (Hold) and a +1.14% ESP, based on a Most Accurate Estimate of $0.92 against a consensus of $0.91 for its September 4 report. Both cases suggest recent, positive analyst revisions that could precede an earnings beat.

Key Decisions for Investors

• Investors could consider using the outlined Earnings ESP metric as a supplementary screen to identify potential short-term, earnings-driven catalysts, particularly for the two consumer staples stocks highlighted.
• Given Mondelez's stronger #2 (Buy) rating and more significant +4.04% ESP, this signal could be viewed as a tactical confirmation for bullish positions leading into its late July earnings report.
• For Ollie's Bargain Outlet, the weaker +1.14% ESP and #3 (Hold) rating warrant a more cautious stance; investors should monitor for further analyst estimate revisions as its September earnings date approaches.
• It is critical to recognize this strategy relies on a proprietary back-tested model, and its historical success does not guarantee future outperformance or insulate against market risk.