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

Zacks Investment Research promotes its Earnings ESP tool—which measures the percentage gap between the most recent analyst 'Most Accurate Estimate' and the Zacks Consensus—to flag likely earnings surprises, noting that a positive ESP combined with a Zacks Rank of #3 (Hold) or better produced positive EPS surprises 70% of the time and about 28% annualized returns in a 10‑year backtest. The piece spotlights Lululemon (LULU; Rank #3) with a Most Accurate Estimate of $2.23 vs. consensus $2.22 (ESP +0.56%) ahead of its Dec. 4, 2025 report, and Caesars Entertainment (CZR; Rank #3) with a Most Accurate Estimate of -$0.04 vs. consensus -$0.07 (ESP +33.55%) ahead of its Feb. 24, 2026 report, and recommends using the ESP filter to uncover names with higher probabilities of beating or missing upcoming earnings for trading opportunities.

Analysis

Zacks Investment Research highlights its Earnings ESP (Expected Surprise Prediction) methodology, which measures the percentage gap between the Most Accurate Estimate (the most recent analyst estimate) and the Zacks Consensus to flag likely earnings surprises; the firm reports that a positive ESP combined with a Zacks Rank of #3 (Hold) or better produced positive bottom-line surprises 70% of the time and ~28% annualized returns in a 10-year backtest. The ESP premise rests on the assumption that late analyst revisions contain incremental information and thus can be a leading indicator ahead of quarterly releases.

Lululemon (LULU) is presented with a Zacks Rank #3 and a Most Accurate Estimate of $2.23 versus a consensus of $2.22, producing an ESP of +0.56% ahead of its December 4, 2025 report (13 days out). The magnitude of LULU's ESP is small, implying only a modest statistical edge that should be weighed against company fundamentals and existing positioning rather than relied on for large directional bets.

Caesars Entertainment (CZR) shows a materially larger ESP of +33.55% driven by a Most Accurate Estimate of -$0.04 versus consensus -$0.07 for its February 24, 2026 report (95 days out), signaling a higher probability of a positive surprise but also reflecting loss estimates and a longer revision window. Both names carry the same Zacks Rank (#3), which Zacks defines as expected to perform in-line with the market, so investors should treat ESP signals as one input and monitor revision trajectories and management commentary closely.

Key Decisions for Investors

• For LULU: avoid large directional positions based solely on the +0.56% ESP given the small magnitude; consider a limited event-oriented trade or wait for further analyst revisions and management guidance before increasing exposure
• For CZR: the +33.55% ESP suggests a higher probability of an upside surprise; consider selective, size-limited exposure or defined-risk option strategies ahead of the February report while monitoring revision momentum because the estimate is negative and the report is 95 days away
• Treat Zacks ESP as a screening tool rather than a standalone investment trigger: combine ESP signals with recent analyst revision trends, company fundamentals and near-term catalysts, and scale positions modestly
• Manage risk through position sizing and hedges around earnings (use stop-losses or options collars) because backtest success does not eliminate the risk of surprise misses or volatile post-earnings reactions