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

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.

The Zacks Earnings ESP, Explained

The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.

With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.

Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.

Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.

Should You Consider Royal Caribbean?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Royal Caribbean (RCL) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $5.69 a share, just one day from its upcoming earnings release on October 28, 2025.

Royal Caribbean's Earnings ESP sits at +0.29%, which, as explained above, is calculated by taking the percentage difference between the $5.69 Most Accurate Estimate and the Zacks Consensus Estimate of $5.67. RCL is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

RCL is part of a big group of Consumer Discretionary stocks that boast a positive ESP, and investors may want to take a look at Under Armour (UAA) as well.

Slated to report earnings on November 6, 2025, Under Armour holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $0.03 a share 10 days from its next quarterly update.

The Zacks Consensus Estimate for Under Armour is $0.02, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +1.85%.

Because both stocks hold a positive Earnings ESP, RCL and UAA could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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This article originally published on Zacks Investment Research (zacks.com).

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