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

Zacks highlights its proprietary Earnings ESP (Expected Surprise Prediction) tool, which forecasts earnings surprises by comparing the Most Accurate Estimate to the Zacks Consensus Estimate. Historically, stocks with a positive ESP and a Zacks Rank #3 (Hold) or better have demonstrated a 70% probability of reporting positive earnings surprises, yielding average annual returns of 28.3% over a decade. The article identifies construction sector companies United Rentals (URI) and Martin Marietta (MLM) as current examples, holding positive ESPs of +4.97% and +3.04% respectively, suggesting a strong potential for upcoming earnings beats.

Analysis

The analysis centers on the Zacks Earnings ESP (Expected Surprise Prediction) model, a quantitative tool designed to identify companies with a high probability of surpassing earnings estimates. The model's efficacy is supported by a 10-year backtest indicating that stocks with a positive ESP and a Zacks Rank of #3 (Hold) or better delivered a positive earnings surprise 70% of the time, generating average annual returns of 28.3%. The report highlights two construction sector stocks, United Rentals (URI) and Martin Marietta (MLM), as currently exhibiting these characteristics. United Rentals has a positive Earnings ESP of +4.97%, derived from its Most Accurate Estimate of $11.12 per share versus a consensus of $10.59. Similarly, Martin Marietta shows a positive ESP of +3.04%, with a Most Accurate Estimate of $5.67 against a consensus of $5.50. Both companies hold a Zacks Rank #3 (Hold), suggesting that while they are poised for a potential near-term earnings beat, their longer-term expectation is to perform in-line with the broader market.

Key Decisions for Investors

• Investors might consider initiating tactical long positions in United Rentals (URI) and Martin Marietta (MLM) ahead of their upcoming earnings releases to capitalize on the potential for a positive earnings surprise.
• Given its higher ESP of +4.97% and nearer reporting date of July 23, 2025, URI presents a more immediate and statistically stronger signal for a potential event-driven trade.
• It is crucial to contextualize this opportunity with the Zacks Rank #3 (Hold) rating on both stocks, which implies that any position should be viewed as a short-term play on an earnings catalyst rather than a signal for long-term outperformance.