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Want Better Returns? Don't Ignore These 2 Construction Stocks Set to Beat Earnings

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.

2 Stocks to Add to Your Watchlist

The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information. 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.


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. Lennar (LEN) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $2.38 a share, just 18 days from its upcoming earnings release on June 20, 2023.

Lennar's Earnings ESP sits at 3.65%, which, as explained above, is calculated by taking the percentage difference between the $2.38 Most Accurate Estimate and the Zacks Consensus Estimate of $2.30.

LEN is just one of a large group of Construction stocks with a positive ESP figure. D.R. Horton (DHI) is another qualifying stock you may want to consider.

D.R. Horton is a Zacks Rank #1 (Strong Buy) stock, and is getting ready to report earnings on July 20, 2023. DHI's Most Accurate Estimate sits at $2.82 a share 48 days from its next earnings release.

The Zacks Consensus Estimate for D.R. Horton is $2.80, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.6%.

LEN and DHI's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Lennar Corporation (LEN) : Free Stock Analysis Report

D.R. Horton, Inc. (DHI) : Free Stock Analysis Report

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Zacks Investment Research