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

Zacks Investment Research promotes its Earnings ESP (Expected Surprise Prediction) tool, which identifies stocks likely to beat analyst earnings estimates by comparing the Most Accurate Estimate against the Zacks Consensus Estimate. Historically, combining a positive ESP with a Zacks Rank #3 (Hold) or stronger has resulted in a 70% positive bottom-line surprise rate and average annual returns of 28% over a 10-year backtest. The article highlights consumer discretionary stocks MGM Resorts (MGM) and Ralph Lauren (RL) as current examples, with positive ESPs of +3.84% and +1.52% respectively, indicating a high probability of exceeding expectations in their upcoming reports.

Analysis

The analysis highlights a quantitative strategy for identifying potential earnings beats, centered on the Zacks Earnings Surprise Prediction (ESP) metric. This method, which compares the Most Accurate Analyst Estimate to the consensus estimate, reportedly identifies stocks that deliver positive bottom-line surprises 70% of the time when combined with a Zacks Rank of #3 (Hold) or better, yielding a 28% average annual return in a 10-year backtest. The report applies this framework to two consumer discretionary stocks. Ralph Lauren (RL) is presented as a particularly strong candidate, holding a Zacks Rank #1 (Strong Buy) and a positive ESP of +1.52% based on a Most Accurate Estimate of $3.35 versus a consensus of $3.30 ahead of its November 6, 2025 report. MGM Resorts (MGM) is also identified as having a high probability of an earnings beat, with a positive ESP of +3.84% ($0.43 Most Accurate Estimate vs. $0.42 consensus). However, its more neutral Zacks Rank #3 (Hold) suggests it is expected to perform in-line with the broader market, making the potential earnings surprise a key near-term catalyst to watch ahead of its October 29, 2025 release.

Key Decisions for Investors

• Investors should consider utilizing the Earnings Surprise Prediction (ESP) as a quantitative screen to identify stocks with a higher probability of delivering positive earnings surprises, particularly for tactical positioning ahead of reporting dates.
• Ralph Lauren's combination of a Zacks #1 'Strong Buy' rating and a positive +1.52% ESP makes it a compelling candidate for investors seeking exposure to a potential earnings-driven upside in the consumer discretionary sector.
• For MGM Resorts, the significant +3.84% ESP suggests a strong likelihood of an earnings beat, but its neutral #3 'Hold' rating warrants a more cautious approach; this could be viewed as a potential catalyst-driven trade rather than a long-term conviction buy.
• While the positive ESP figures for both companies are constructive short-term indicators, this probabilistic data should be incorporated into a broader analysis that includes fundamental valuation, sector trends, and overall portfolio risk management.