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

Zacks' Earnings ESP (Expected Surprise Prediction) methodology is presented as a strategy to identify stocks poised for positive earnings surprises. This system, which combines a positive ESP (derived from comparing the most accurate analyst estimate to the consensus) with a Zacks Rank #3 or stronger, has historically predicted positive bottom-line surprises 70% of the time and generated an average 28% annual return over a 10-year backtest. PepsiCo (PEP) with a +0.49% ESP and Kimberly-Clark (KMB) with a +17.43% ESP are cited as current examples, indicating the filter's utility for uncovering potential pre-earnings trading opportunities.

Analysis

The provided research highlights a quantitative strategy, the Zacks Earnings ESP (Expected Surprise Prediction), for identifying stocks with a high probability of delivering positive earnings surprises. The methodology, which combines a positive ESP with a Zacks Rank of #3 (Hold) or better, has historically predicted upside surprises 70% of the time, with a 10-year backtest yielding an average annual return of approximately 28%. Two consumer staples stocks are presented as current examples of this signal. PepsiCo (PEP), with a Zacks Rank of #3 (Hold), shows a marginal positive ESP of +0.49% ahead of its October 9, 2025 earnings, based on a Most Accurate Estimate of $2.28 versus a consensus of $2.27. In contrast, Kimberly-Clark (KMB), also a #3 (Hold), displays a significantly more potent signal with an ESP of +17.43%, driven by a large divergence between its Most Accurate Estimate of $1.92 and the consensus of $1.64. According to this model, both companies are positioned for a potential earnings beat, but the quantitative indicator for Kimberly-Clark is substantially stronger, suggesting a higher probability or magnitude of a positive surprise.

Key Decisions for Investors

• Investors could utilize the Zacks Earnings ESP as a quantitative screening tool to identify potential short-term, catalyst-driven trades ahead of earnings reports, particularly for names in the consumer staples sector.
• Given its substantial +17.43% ESP, Kimberly-Clark (KMB) presents as a more compelling tactical opportunity for those positioning for a pre-earnings run-up or a post-announcement pop, as the signal for a positive surprise is significantly stronger than for PepsiCo.
• For PepsiCo (PEP), the minimal +0.49% ESP signal suggests a lower conviction for a significant earnings beat and should be weighed against its neutral #3 (Hold) rating, implying that upside may be more muted.
• It is crucial to recognize that both stocks carry a #3 (Hold) rating, indicating an expectation of in-line market performance, thus any position based on the ESP signal should be considered a short-term, probabilistic trade rather than a change in long-term fundamental thesis.