These two retail and wholesale companies may surpass earnings expectations: Here’s why you should keep an eye on them

Key Drivers of Stock Prices: Earnings and Interest Rates

Over time, stock values are primarily influenced by two elements: a company's earnings and prevailing interest rates. While investors have no sway over interest rates, they can closely monitor quarterly earnings reports to inform their decisions.

Although earnings are crucial, the way a company's results compare to analysts' expectations often has an even greater impact on share prices in the short term. This makes earnings surprises an attractive opportunity for investors looking to capitalize on market movements.

Leveraging Earnings Surprises with the Zacks ESP Filter

Understanding the significance of earnings and unexpected results, investors can enhance their returns by using the Zacks Earnings ESP filter to identify stocks likely to outperform.

What Is the Zacks Earnings ESP?

The Zacks Earnings ESP, or Expected Surprise Prediction, is designed to anticipate earnings surprises by analyzing recent analyst estimate revisions before a company releases its results. The logic is straightforward: newer estimates often reflect more comprehensive information.

The ESP model compares the Most Accurate Estimate with the Zacks Consensus Estimate, calculating the percentage difference to predict potential surprises. The Zacks Rank is also incorporated to highlight companies that may exceed consensus expectations, potentially boosting their share prices.

Combining a positive Earnings ESP with a Zacks Rank of #3 (Hold) or higher has historically led to positive earnings surprises in 70% of cases. According to a decade-long backtest, this strategy has delivered average annual returns of 28.3%.

• Stocks rated #3 (Hold) are expected to perform in line with the broader market.
• Stocks with a #2 (Buy) or #1 (Strong Buy) rating—representing the top 15% and top 5% respectively—are projected to outperform, with Strong Buy stocks leading the pack.

Ulta Beauty: A Stock to Watch

With a clear understanding of the ESP metric, let's examine a stock that currently meets these criteria.

Ulta Beauty (ULTA) holds a #3 (Hold) rating, and its Most Accurate Estimate stands at $8.58 per share, just two weeks ahead of its earnings announcement on March 12, 2026.

The Earnings ESP for Ulta Beauty is +7.47%, calculated by comparing the Most Accurate Estimate ($8.58) to the Zacks Consensus Estimate ($7.98). ULTA is among many stocks with a positive ESP.

Ulta Beauty is part of a broader group of Retail and Wholesale stocks showing positive ESP figures.

Dollar Tree (DLTR) is another stock worth considering. Scheduled to report earnings on March 16, 2026, Dollar Tree also has a #3 (Hold) Zacks Rank, with its Most Accurate Estimate at $2.58 per share, 18 days before its quarterly update.

For Dollar Tree, the ESP is +2.50%, reflecting the difference between its Most Accurate Estimate ($2.58) and the Zacks Consensus Estimate ($2.52).

The positive ESP values for ULTA and DLTR suggest both may deliver earnings surprises in their upcoming reports.

Discover Stocks Before Earnings Are Announced

Utilize the Zacks Earnings ESP Filter to identify stocks with the highest likelihood of beating or missing earnings estimates, enabling you to buy or sell ahead of earnings season for optimal trading results.

Is Ulta Beauty Inc. (ULTA) a Good Investment?

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Since 1978, Zacks Investment Research has provided investors with independent analysis and tools. Over more than 25 years, the Zacks Rank stock-rating system has outperformed the S&P 500, achieving an average annual gain of +24.08% from January 1, 1988 to May 6, 2024.

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• Ulta Beauty Inc. (ULTA): Free Stock Analysis Report
• Dollar Tree, Inc. (DLTR): Free Stock Analysis Report
• Read more about these Retail and Wholesale stocks

Source: Zacks Investment Research