How to Find Strong Retail and Wholesale Stocks Slated for Positive Earnings Surprises

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.

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.

Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 28.3% annual returns on average, according to our 10 year backtest.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider Advance Auto Parts?

The final step today is to look at a stock that meets our ESP qualifications. Advance Auto Parts (AAP) earns a #3 (Hold) one day from its next quarterly earnings release on February 13, 2026, and its Most Accurate Estimate comes in at $0.42 a share.

By taking the percentage difference between the $0.42 Most Accurate Estimate and the $0.41 Zacks Consensus Estimate, Advance Auto Parts has an Earnings ESP of +1.22%. Investors should also know that AAP is one of a large group of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

AAP is part of a big group of Retail and Wholesale stocks that boast a positive ESP, and investors may want to take a look at McDonald's (MCD) as well.

Slated to report earnings on May 7, 2026, McDonald's holds a #3 (Hold) ranking on the Zacks Rank, and its Most Accurate Estimate is $2.92 a share 84 days from its next quarterly update.

For McDonald's, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.90 is +0.68%.

Because both stocks hold a positive Earnings ESP, AAP and MCD 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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