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) methodology, which identifies stocks likely to exceed consensus earnings estimates by comparing the 'Most Accurate Estimate' to the 'Zacks Consensus Estimate.' This system, when combined with a Zacks Rank of #3 (Hold) or stronger, has historically predicted positive earnings surprises 70% of the time and delivered average annual returns of 28% over a decade. Currently, consumer discretionary stocks Ralph Lauren (RL), with a +1.02% ESP and Zacks Rank #2, and Take-Two Interactive (TTWO), with a +13.93% ESP and Zacks Rank #3, are presented as candidates for positive earnings surprises ahead of their August 7, 2025 reports, based on these metrics.

Analysis

Two consumer discretionary stocks, Ralph Lauren (RL) and Take-Two Interactive (TTWO), have been identified as having a high probability of delivering a positive earnings surprise in their upcoming quarterly reports on August 7, 2025. This assessment is based on the Zacks Earnings Expected Surprise Prediction (ESP) model, which historically predicts positive bottom-line surprises 70% of the time when a positive ESP is combined with a Zacks Rank of #3 (Hold) or better. Ralph Lauren holds a Zacks Rank #2 (Buy), indicating expectations of market outperformance, and exhibits a positive Earnings ESP of +1.02%, derived from its Most Accurate Estimate of $3.46 per share versus a consensus of $3.43. Concurrently, Take-Two Interactive, while rated #3 (Hold) and expected to perform in-line with the market, shows a significantly more pronounced Earnings ESP of +13.93%. This is based on a Most Accurate Estimate of $0.30 per share compared to a consensus of $0.26, suggesting recent analyst revisions are notably more bullish than the broader average.

Key Decisions for Investors

• Investors may consider establishing tactical long positions in RL and TTWO ahead of their August 7th earnings announcements to capitalize on a potential post-release price increase driven by an earnings beat.
• Evaluate the distinct risk-reward profiles: Ralph Lauren's #2 (Buy) rank suggests stronger underlying fundamentals, while Take-Two Interactive's substantially higher ESP of +13.93% could signal a greater magnitude of surprise, albeit with a more neutral #3 (Hold) rating.
• Acknowledge that this trade is predicated on a quantitative, event-driven model; therefore, positions should be sized appropriately to account for the model's historical 30% failure rate in predicting positive surprises.