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How to Boost Your Portfolio with Top Consumer Staples Stocks Set to Beat Earnings

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Wall Street watches a company's quarterly report closely to understand as much as possible about its recent performance and what to expect going forward. Of course, one figure often stands out among the rest: earnings.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive 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 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.

The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction. The Zacks Rank is also factored into the ESP metric to better help find companies that appear poised to top their next bottom-line consensus estimate, which will hopefully help lift the stock price.

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 Coca-Cola?

The final step today is to look at a stock that meets our ESP qualifications. Coca-Cola (KO - Free Report) earns a #2 (Buy) 18 days from its next quarterly earnings release on February 14, 2023, and its Most Accurate Estimate comes in at $0.46 a share.

Coca-Cola's Earnings ESP sits at +2.98%, which, as explained above, is calculated by taking the percentage difference between the $0.46 Most Accurate Estimate and the Zacks Consensus Estimate of $0.45. KO 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.

KO is one of just a large database of Consumer Staples stocks with positive ESPs. Another solid-looking stock is Inter Parfums (IPAR - Free Report) .

Slated to report earnings on March 7, 2023, Inter Parfums holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.34 a share 39 days from its next quarterly update.

For Inter Parfums, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.29 is +17.24%.

KO and IPAR's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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 >>


See More Zacks Research for These Tickers


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CocaCola Company (The) (KO) - free report >>

Inter Parfums, Inc. (IPAR) - free report >>

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