Ways to Enhance Your Portfolio with Leading Retail and Wholesale Stocks Poised to Surpass Earnings Expectations

The Importance of Earnings in Financial Reports

When reviewing a company's quarterly financial statements, earnings per share (EPS) often stand out as the most critical figure. While investors and analysts consider a variety of metrics and management commentary, the EPS number provides a clear snapshot that helps filter out distractions.

Both in investing and in life, expectations play a significant role. Surpassing anticipated results is typically met with positive reactions, whereas missing the mark can have adverse effects. Investors seeking to maximize returns may look for companies that deliver earnings surprises on the upside.

Spotting stocks that are likely to exceed quarterly earnings forecasts can be lucrative, but it's a challenging endeavor. Zacks offers an Earnings ESP filter to simplify this process for investors.

Understanding the Zacks Earnings ESP

The Earnings ESP, or Expected Surprise Prediction, is designed to give investors an edge by focusing on the most recent analyst estimate changes before a company reports earnings. The logic is straightforward: newer estimates may reflect the latest available information.

This tool compares the Most Accurate Estimate—typically the freshest analyst projection—with the broader Zacks Consensus Estimate. The percentage difference between these two numbers forms the ESP value. By combining this metric with the Zacks Rank, investors have a more robust method for identifying stocks that could outperform earnings expectations and potentially see their share prices rise.

Historically, stocks with a positive Earnings ESP and a Zacks Rank of #3 (Hold) or better have delivered a positive earnings surprise about 70% of the time. According to a decade-long backtest, this approach has generated average annual returns of approximately 28%.

Roughly 60% of stocks are rated as #3 (Hold), which means they are expected to perform in line with the overall market. Those with a #2 (Buy) or #1 (Strong Buy) rating—representing the top 15% and top 5% of stocks, respectively—are projected to outperform, with Strong Buy stocks leading the pack.

Spotlight on Williams-Sonoma

To illustrate how the ESP works, let's examine a stock that currently qualifies under this system.

Williams-Sonoma (WSM) currently holds a Zacks Rank #2 (Buy). Its Most Accurate Estimate stands at $2.90 per share, with 14 days remaining before its next earnings announcement on March 18, 2026.

The Earnings ESP for WSM is +0.35%, calculated by comparing the $2.90 Most Accurate Estimate to the Zacks Consensus Estimate of $2.89. Williams-Sonoma is just one of many stocks in the database with a positive ESP. You can use the Earnings ESP Filter to discover more opportunities before companies release their results.

Other Retail and Wholesale Stocks to Watch

Williams-Sonoma isn't alone in showing a positive ESP. Texas Roadhouse (TXRH) is another stock worth considering.

Texas Roadhouse is set to report earnings on May 14, 2026, and currently has a Zacks Rank #3 (Hold). The Most Accurate Estimate for TXRH is $1.86 per share, with 71 days until its next earnings release.

With a Zacks Consensus Estimate of $1.85, the resulting Earnings ESP for Texas Roadhouse is +0.94%.

The positive ESP values for both WSM and TXRH suggest that these companies could deliver earnings surprises in the upcoming quarter.

How to Find Stocks Before Earnings Announcements

The Zacks Earnings ESP Filter is a valuable resource for identifying stocks with the highest likelihood of delivering positive or negative surprises. This can help you make informed buy or sell decisions ahead of earnings season.

Is Williams-Sonoma, Inc. (WSM) a Good Investment?

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Since 1978, Zacks Investment Research has provided investors with independent research and powerful tools. Over more than 25 years, the Zacks Rank stock-rating system has achieved an average annual return of +24.08%, more than doubling the S&P 500 from January 1, 1988, through May 6, 2024.

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