Why Now Is the Time for Investors to Capitalize on These Two Retail and Wholesale Stocks

Understanding the Importance of Quarterly Earnings Reports

Investors on Wall Street pay close attention to a company's quarterly earnings announcements to gauge its recent financial health and to anticipate future trends. Among the various metrics reported, earnings often take center stage.

While the earnings number itself is crucial, whether a company exceeds or falls short of expectations can be just as significant. Surpassing earnings forecasts can propel a stock higher, while missing them may have the opposite effect. As a result, monitoring these earnings surprises is vital for investors.

Spotting stocks that are likely to outperform earnings estimates can be rewarding, though it is not always straightforward. Zacks offers a tool called the Earnings ESP filter to help simplify this process.

What Is the Zacks Earnings ESP?

The Earnings ESP, or Expected Surprise Prediction, is designed to capture the most recent changes in analyst forecasts before a company reports its results. The logic is that the latest estimates may reflect more up-to-date information.

This model works by comparing the Most Accurate Estimate with the Zacks Consensus Estimate. The percentage difference between these two figures forms the ESP. The Zacks Rank is also incorporated to help identify companies that are likely to exceed their consensus earnings projections, which could potentially boost their stock prices.

Historically, when a stock has both a positive ESP and a Zacks Rank of #3 (Hold) or better, it has delivered a positive earnings surprise 70% of the time. According to a decade-long backtest, this approach has generated average annual returns of about 28% for investors.

Stocks rated #3 (Hold) are generally expected to perform in line with the overall market, representing about 60% of covered companies. Those with a #2 (Buy) or #1 (Strong Buy) rating—making up the top 15% and 5% of stocks, respectively—are projected to outperform, with Strong Buy stocks leading the way.

Is Petco Health & Wellness Worth Your Attention?

With an understanding of the ESP, let's look at a stock that currently fits these criteria.

Petco Health & Wellness (WOOF) currently holds a Zacks Rank #3 (Hold), and its Most Accurate Estimate is $0.03 per share, just ahead of its earnings release scheduled for March 11, 2026.

WOOF's Earnings ESP stands at +100.00%, calculated as the percentage difference between the $0.03 Most Accurate Estimate and the Zacks Consensus Estimate of $0.02. Petco is among many stocks with a positive ESP. To find more opportunities, consider using the Earnings ESP Filter to identify stocks with the potential for significant moves before earnings are announced.

Petco is just one example among many Retail and Wholesale stocks showing positive ESPs. Another notable candidate is Ross Stores (ROST).

Ross Stores, set to report earnings on May 28, 2026, also has a Zacks Rank #3 (Hold). Its Most Accurate Estimate is $1.65 per share, with 79 days remaining until its next earnings announcement.

The Zacks Consensus Estimate for Ross Stores is $1.64. The difference between this and the Most Accurate Estimate results in an ESP of +0.84%.

Both WOOF and ROST, with their positive ESPs, could be positioned for favorable earnings surprises in the near future.

How to Find Stocks Before Earnings Are Announced

The Zacks Earnings ESP Filter is a valuable resource for identifying stocks most likely to deliver unexpected results—either positive or negative—so you can make informed buy or sell decisions ahead of earnings season.

Should You Invest in Petco Health and Wellness Company, Inc. (WOOF)?

If you're considering an investment in Petco Health and Wellness Company, Inc. (WOOF), you might also be interested in learning about the top stocks to buy over the next month. Zacks Investment Research offers a complimentary report on the 7 best stocks to consider.

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 delivered an average annual return of +24.08%, more than doubling the S&P 500 from January 1, 1988, through May 6, 2024.

For the latest stock picks from Zacks Investment Research, you can download the 7 Best Stocks for the Next 30 Days.

• Petco Health and Wellness Company, Inc. (WOOF): Free Stock Analysis Report
• Ross Stores, Inc. (ROST): Free Stock Analysis Report