Why Investors Need to Take Advantage of These 2 Auto, Tires and Trucks Stocks Now

Zacks Investment Research highlights its proprietary Earnings ESP (Expected Surprise Prediction) tool as a method for identifying stocks likely to post positive earnings surprises. The model, which compares the Most Accurate Estimate to the Zacks Consensus Estimate, has historically shown that stocks with a positive ESP and a Zacks Rank of #3 or stronger delivered positive bottom-line surprises 70% of the time, yielding average annual returns of 28% over a decade. Currently, LCI (LCII) and Cummins (CMI) are presented as examples within the Auto, Tires and Trucks sector, both exhibiting positive ESPs of +4.62% and +2.79% respectively, and a Zacks Rank #3, signaling potential upside ahead of their August 5, 2025 earnings reports.

Analysis

Based on the Zacks proprietary Earnings Expected Surprise Prediction (ESP) model, both LCI Industries (LCII) and Cummins (CMI) are showing quantitative signals of a potential positive earnings surprise for their upcoming reports on August 5, 2025. The model, which has a reported historical success rate of 70% in predicting positive surprises when combined with a Zacks Rank of #3 (Hold) or better, identifies a positive ESP for both companies. Specifically, LCII has an ESP of +4.62%, stemming from a Most Accurate Estimate of $2.32 per share versus a consensus of $2.22. Similarly, CMI holds a positive ESP of +2.79%, with its Most Accurate Estimate at $5.13 per share against a consensus of $4.99. While both stocks currently have a neutral Zacks Rank #3 (Hold), indicating an expectation of in-line market performance, this short-term predictive metric suggests a potential upside catalyst for these two names within the Auto, Tires, and Trucks sector.

Key Decisions for Investors

• Investors with a short-term horizon may consider tactical long positions in LCII and CMI ahead of their August 5, 2025, earnings releases to capitalize on the high probability of a positive earnings surprise indicated by the ESP model.
• It is important to weigh the positive short-term ESP signal against the neutral Zacks Rank #3 (Hold) rating, which suggests longer-term performance may only be in-line with the market.
• Investors could utilize the Zacks Earnings ESP filter as a systematic screening tool to identify other potential earnings surprise candidates across their portfolios, rather than relying solely on these two examples.
• Given that this is a model-based probabilistic signal, positions should be managed with an understanding that a positive earnings surprise does not guarantee a positive stock price reaction.