Why Investors Need to Take Advantage of These 2 Retail and Wholesale Stocks Now

Zacks' Earnings ESP (Expected Surprise Prediction) tool identifies stocks likely to beat quarterly earnings by comparing the Most Accurate Estimate to the Zacks Consensus. This methodology, when combined with a Zacks Rank #3 (Hold) or better, has historically predicted positive earnings surprises 70% of the time and generated an impressive average annual return of 28.3% over a 10-year backtest. Home Depot (HD) and Deckers (DECK) are cited as current examples with positive ESPs (+2.64% and +0.85% respectively), indicating a high probability of exceeding analyst expectations in their upcoming reports.

Analysis

The Zacks Earnings Expected Surprise Prediction (ESP) model indicates a heightened probability of positive earnings surprises for both Home Depot (HD) and Deckers (DECK) ahead of their upcoming quarterly reports. This proprietary model quantifies the difference between the most recent analyst estimate and the consensus estimate, with a positive ESP suggesting recent upward revisions. According to the provided 10-year backtest, combining a positive ESP with a Zacks Rank of #3 (Hold) or better has historically resulted in a positive earnings surprise 70% of the time, generating an average annual return of 28.3%. Home Depot, with a Zacks Rank of #3 and an earnings release scheduled for November 12, 2024, exhibits a positive ESP of +2.64%, based on a Most Accurate Estimate of $3.74 versus a consensus of $3.64. Similarly, Deckers, also ranked #3 (Hold) and reporting on October 24, 2024, has a positive ESP of +0.85%, based on a Most Accurate Estimate of $1.23 against a consensus of $1.22. These signals flag both retail sector companies as candidates for an earnings beat based on the model's criteria.

Key Decisions for Investors

• Investors with positions in Home Depot (HD) or Deckers (DECK) should be aware of the heightened potential for a positive earnings surprise in their upcoming reports, as indicated by the positive ESP signals of +2.64% and +0.85% respectively.
• Traders focused on event-driven strategies could consider these stocks for potential short-term upside, but should balance the positive surprise indicator against the neutral Zacks Rank of #3 (Hold), which implies expected performance in-line with the broader market.
• While the model's backtested 28.3% average annual return is compelling, it is crucial to recognize this is based on historical data and a proprietary system; any investment decision should weigh this single indicator against broader fundamental and market analysis.