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5 Technology Stocks Poised to Surpass Earnings Estimates
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The first quarter earnings season is approaching its end with 409 S&P 500 members having already reported their quarterly results, as of May 4.
Notably, the Technology sector is one of the top performers this earnings season, despite the many hurdles that it faced during the quarter. The Technology Select Sector SPDR ETF (“XLK”) returned 5.8% in the year-to-date period against the S&P 500’s decline of 0.4%.
According to the latest Earnings Preview, 83.1% of the sector’s total market capitalization in the S&P 500 index has reported results, with 90.9% beating EPS estimates and 93.2% surpassing top-line projections.
Moreover, total earnings for these tech companies increased 29.6% year over year on 12% higher revenues. This can be attributed to robust performance of tech giants like Apple, Facebook, Amazon, Netflix, Intel, Microsoft and Google.
Performance of Some Tech Players
Apple’s results benefited from growth in iPhone and Services segment. Strong demand for iPhone in China, despite severe competition, was a key driver.
In spite of growing concerns over data privacy and security issues, Facebook had a superb run on the back of higher mobile ad revenues and expanding user base.
Moreover, expanding customer base of Amazon Web Services (AWS) and Prime helped Amazon crush estimates.
Further, Microsoft’s cloud computing platform Azure continued its solid growth during the quarter.
Additionally, the increasing demand for semiconductor chips that harnesses cloud computing and emerging trends of artificial intelligence (AI) and machine learning drove Intel. Additionally, rising demand for solutions related to self-driving vehicles and Internet of Things (IoT) boost top-line growth.
Earnings Trend Positive
Total earnings for the tech sector are now expected to increase 28.5%, while revenues are expected to grow 12.6% on a year-over-year basis. This is higher than 24.2% earnings growth witnessed in fourth-quarter 2017 on an 11.1% increase in the top line.
How to Make the Right Pick?
Given the existence of a number of industry players, finding the right stocks that have the potential to beat earnings could be a daunting task. Our proprietary methodology, however, makes it fairly simple for you. You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Given below are five technology providers that have the right combination of elements to post an earnings beat this quarter:
Nice Ltd. (NICE - Free Report) sports a Zacks Rank #1 and has an Earnings ESP of +0.75%. We note that the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive earnings surprise of 2.84%. The company is set to report first- quarter results on May 10.
TheStreet, Inc. sports a Zacks Rank of #1 and has an Earnings ESP of +100%. The company delivered an average positive earnings surprise of 329.2% over the trailing four quarters. The company is slated to report first quarter results on May 8.
Microchip Technology Inc. (MCHP - Free Report) is slated to release fourth-quarter fiscal 2018 results on May 8. The stock carries a Zacks Rank #2 and has an Earnings ESP of +0.15%. The stock surpassed the Zacks Consensus Estimate in the preceding four quarters, delivering an average positive surprise of 5.3%.
ChannelAdvisor Corp. is scheduled to release first-quarter results on May 10. The company has an Earnings ESP of +14.36% and a Zacks Rank #2. We note that the company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 36.5%.
NVIDIA Corp. (NVDA - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #3. Notably, the company outpaced the Zacks Consensus Estimate in the preceding four quarters, delivering an average positive earnings surprise of 40.8%. The company is set to report first-quarter fiscal 2019 results on May 10.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
5 Technology Stocks Poised to Surpass Earnings Estimates
The first quarter earnings season is approaching its end with 409 S&P 500 members having already reported their quarterly results, as of May 4.
Notably, the Technology sector is one of the top performers this earnings season, despite the many hurdles that it faced during the quarter. The Technology Select Sector SPDR ETF (“XLK”) returned 5.8% in the year-to-date period against the S&P 500’s decline of 0.4%.
According to the latest Earnings Preview, 83.1% of the sector’s total market capitalization in the S&P 500 index has reported results, with 90.9% beating EPS estimates and 93.2% surpassing top-line projections.
Moreover, total earnings for these tech companies increased 29.6% year over year on 12% higher revenues. This can be attributed to robust performance of tech giants like Apple, Facebook, Amazon, Netflix, Intel, Microsoft and Google.
Performance of Some Tech Players
Apple’s results benefited from growth in iPhone and Services segment. Strong demand for iPhone in China, despite severe competition, was a key driver.
In spite of growing concerns over data privacy and security issues, Facebook had a superb run on the back of higher mobile ad revenues and expanding user base.
Moreover, expanding customer base of Amazon Web Services (AWS) and Prime helped Amazon crush estimates.
Further, Microsoft’s cloud computing platform Azure continued its solid growth during the quarter.
Additionally, the increasing demand for semiconductor chips that harnesses cloud computing and emerging trends of artificial intelligence (AI) and machine learning drove Intel. Additionally, rising demand for solutions related to self-driving vehicles and Internet of Things (IoT) boost top-line growth.
Earnings Trend Positive
Total earnings for the tech sector are now expected to increase 28.5%, while revenues are expected to grow 12.6% on a year-over-year basis. This is higher than 24.2% earnings growth witnessed in fourth-quarter 2017 on an 11.1% increase in the top line.
How to Make the Right Pick?
Given the existence of a number of industry players, finding the right stocks that have the potential to beat earnings could be a daunting task. Our proprietary methodology, however, makes it fairly simple for you. You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP.
Earnings ESP is our proprietary methodology for determining stocks that have the best chance to surprise with their next earnings announcement. It provides the percentage difference between the Most Accurate estimate and the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Our research shows that for stocks with this combination, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Given below are five technology providers that have the right combination of elements to post an earnings beat this quarter:
Nice Ltd. (NICE - Free Report) sports a Zacks Rank #1 and has an Earnings ESP of +0.75%. We note that the company has surpassed the Zacks Consensus Estimate in the trailing four quarters, delivering an average positive earnings surprise of 2.84%. The company is set to report first- quarter results on May 10.
You can see the complete list of today’s Zacks #1 Rank stocks here.
TheStreet, Inc. sports a Zacks Rank of #1 and has an Earnings ESP of +100%. The company delivered an average positive earnings surprise of 329.2% over the trailing four quarters. The company is slated to report first quarter results on May 8.
Microchip Technology Inc. (MCHP - Free Report) is slated to release fourth-quarter fiscal 2018 results on May 8. The stock carries a Zacks Rank #2 and has an Earnings ESP of +0.15%. The stock surpassed the Zacks Consensus Estimate in the preceding four quarters, delivering an average positive surprise of 5.3%.
ChannelAdvisor Corp. is scheduled to release first-quarter results on May 10. The company has an Earnings ESP of +14.36% and a Zacks Rank #2. We note that the company beat the Zacks Consensus Estimate in the trailing four quarters, with an average positive earnings surprise of 36.5%.
NVIDIA Corp. (NVDA - Free Report) has an Earnings ESP of +0.45% and a Zacks Rank #3. Notably, the company outpaced the Zacks Consensus Estimate in the preceding four quarters, delivering an average positive earnings surprise of 40.8%. The company is set to report first-quarter fiscal 2019 results on May 10.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>