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

Zacks' Earnings ESP (Expected Surprise Prediction) tool, which compares the most recent analyst estimates against the consensus, combined with a Zacks Rank of #3 (Hold) or better, has historically identified stocks likely to beat earnings, achieving a positive surprise 70% of the time and generating 28.3% average annual returns over a decade. This methodology suggests Williams-Sonoma (WSM) and Urban Outfitters (URBN), both with positive ESPs (+2.87% and +3.60% respectively) and favorable Zacks Ranks, are strong candidates for upcoming earnings beats, offering investors a predictive mechanism for pre-earnings trading.

Analysis

The analysis centers on the Zacks Expected Surprise Prediction (ESP) model, a quantitative tool designed to identify companies likely to surpass earnings estimates. This model's predictive power is derived from comparing the Most Accurate Estimate from recent analyst revisions against the broader Zacks Consensus Estimate. When combined with a Zacks Rank of #3 (Hold) or better, this methodology has historically predicted positive earnings surprises 70% of the time, delivering an average annual return of 28.3% based on a 10-year backtest. The framework specifically flags two retail companies ahead of their August 27, 2025 earnings releases. Williams-Sonoma (WSM) holds a Zacks Rank #2 (Buy) and an ESP of +2.87%, with its Most Accurate Estimate of $1.83 exceeding the consensus of $1.78. Similarly, Urban Outfitters (URBN) has a Zacks Rank #3 (Hold) and a more pronounced ESP of +3.60%, based on a Most Accurate Estimate of $1.49 versus a consensus of $1.44. The positive ESP figures for both WSM and URBN signal a statistically significant probability that each company will report earnings above current market expectations.

Key Decisions for Investors

• Investors could consider tactical long positions in Williams-Sonoma (WSM) and Urban Outfitters (URBN) ahead of their August 27th earnings reports to capitalize on the high probability of a positive earnings surprise.
• When weighing the two opportunities, Williams-Sonoma's superior Zacks Rank of #2 (Buy) suggests stronger underlying analyst conviction compared to Urban Outfitters' #3 (Hold) rating, potentially indicating a more favorable risk-reward profile.
• It is critical to prepare for post-report volatility; a positive earnings beat does not guarantee a positive stock reaction, and investors must also scrutinize management's forward-looking guidance to assess the durability of the performance.