These 2 Consumer Discretionary Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks Investment Research highlights its proprietary Earnings ESP (Expected Surprise Prediction) tool, designed to identify stocks likely to beat earnings estimates by comparing the 'Most Accurate Estimate' to the 'Zacks Consensus Estimate' and integrating the Zacks Rank. Historically, stocks with a positive ESP and a Zacks Rank of #3 (Hold) or stronger have delivered positive bottom-line surprises 70% of the time, yielding average annual returns of 28% over a 10-year backtest. The article cites Roblox (RBLX) and MGM Resorts (MGM) as current examples with positive ESPs, suggesting they are poised for potential earnings beats, offering opportunities for investors seeking profitable earnings season trades.

Analysis

A quantitative analysis based on the Zacks Earnings ESP (Expected Surprise Prediction) model identifies two consumer discretionary stocks, Roblox (RBLX) and MGM Resorts (MGM), as having a high probability of beating their upcoming quarterly earnings estimates. The model, which historically identifies stocks that post positive bottom-line surprises 70% of the time when combined with a Zacks Rank of #3 (Hold) or better, leverages the most recent analyst revisions. Roblox currently holds a Zacks Rank #2 (Buy) and exhibits a positive Earnings ESP of +4.95%, derived from a Most Accurate Estimate of -$0.34 per share versus a consensus of -$0.36 for its report on July 31, 2025. Similarly, MGM Resorts, with a #3 (Hold) rank, shows a more pronounced ESP of +11.1%, based on its Most Accurate Estimate of $0.64 surpassing the consensus of $0.57 ahead of its July 30, 2025 earnings release. The positive ESP figures for both companies suggest that the most informed analysts are raising their expectations, flagging a potential catalyst for stock price appreciation should they deliver an earnings beat.

Key Decisions for Investors

• Investors may consider establishing positions in Roblox (RBLX) and MGM Resorts (MGM) ahead of their late July 2025 earnings reports to potentially capitalize on a positive price reaction following a likely earnings surprise.
• Given its #2 (Buy) rank and positive ESP, RBLX presents a dual-catalyst opportunity, combining the potential for an earnings beat with a broader outlook for market outperformance.
• For MGM, its strong +11.1% ESP suggests a high probability of an earnings beat, making it a compelling tactical trade around the earnings event, even with its neutral #3 (Hold) rating.
• While the model has a 70% historical success rate, investors should acknowledge the inherent risk and understand that this is a probabilistic indicator, not a guarantee of a positive earnings surprise or subsequent stock appreciation.