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The technology sector’s first-quarter performance, so far, has been dominated by gains from robust demand for tech-ridden digitization solutions, courtesy of the ongoing momentum in coronavirus crisis-induced work-from-home and learn-from-home trends.
Solid uptick in cloud-computing solutions and Internet services, increasing demand for high-compute capabilities’ processors, and growing proliferation of AI and machine learning have been benefiting the technology sector, which has been extremely resilient to the impact of COVID-19-induced disruptions.
Moreover, the work-and-learn-from-home necessity has fueled demand for PCs, notebooks, peripheral accessories and cloud storage as reflected in improving trend in PC shipments.
Incidentally, a strong PC market highlights the need for advanced processors in sleek enterprise laptops, which bodes well for the semiconductor companies. Also, short supply of chips has opened up new avenues in this space.
Per John Neuffer, SIA president and CEO, as stated on Mar 1, “Global semiconductor production is on the rise to meet increasing demand and ease the ongoing chip shortage affecting the auto sector and others, and annual sales are projected to increase in 2021.”
Further, continuing work-from-home and online learning wave kept demand for remote-working tech, including advanced technology-based virtual meetings and conference tools, cloud services and cybersecurity solutions high in the quarter under review.
Besides strengthening user penetration for online payment and delivery services, increasing proliferation of IoT and growing clout of cloud-based applications have been driving the sector of late. All of these, in turn, are fueling growth for high-speed Internet services.
Likewise, an e-commerce boom prompted by changing consumer behavior is expected to have contributed to top-line growth. Further, a rebound in the automotive space and uptick in manufacturing amid accelerated deployment of 5G worldwide have been acting as tailwinds.
How to Decisively Make the Right Pick?
As of May 4, 79.5% of the technology sector’s market capitalization in the S&P 500 index had reported first-quarter results. Total earnings for these Tech companies are up +56.7% from the same period last year on +23.3% higher revenues, with 95.3% of the companies beating EPS estimates and 93.0% beating revenue estimates.
Meanwhile, 343 S&P 500 members or 69% of the index’s total membership had reported first-quarter results as of May 4. Total earnings (or aggregate net income) for these 343 companies are up +49.2% on +10.6% higher revenues, with 87.5% beating EPS estimates and 78.1% beating revenue estimates.
It makes sense to invest in alluring technology sector, which is outperforming the broader market on the heels of demand strength and expanding growth avenues.
With the majority of industry players having released earnings, investors now looking to make the most of this reporting cycle are awaiting the results from companies which usually report after the busy period of the earnings season.
However, in the backdrop of captivating prospects, finding the technology stocks having the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks, which have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this apt combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Best Stocks Worth Considering
Given below are five technology stocks that have the right combination of elements to beat on earnings this reporting cycle:
The company is slated to report second-quarter fiscal 2021 results on May 27. The Zacks Consensus Estimate for earnings has been revised upward by a penny to 89 cents per share in the past 30 days.
Santa Clara, CA-headquartered NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank #2, at present.
The company is scheduled to release first-quarter fiscal 2022 results on May 26. The Zacks Consensus Estimate for quarterly earnings has moved north by 4 cents to $3.26 per share over the past 30 days.
Santa Clara, CA-based Agilent Technologies, Inc. (A - Free Report) has an Earnings ESP of +1.57% and a Zacks Rank #2, currently.
The company is slated to report second-quarter fiscal 2021 results on May 25. The Zacks Consensus Estimate for earnings has been revised upward by a penny to 82 cents per share in the past 30 days.
Based in Mountain View, CA, Pure Storage, Inc. (PSTG - Free Report) has an Earnings ESP of +10.81% and a Zacks Rank #2, at present.
The company is scheduled to release first-quarter fiscal 2022 results on May 26. The Zacks Consensus Estimate for the bottom line has remained steady at a loss of 7 cents over the past 30 days.
Headquartered in San Jose, CA, Cisco Systems, Inc. (CSCO - Free Report) has an Earnings ESP of +0.52% and a Zacks Rank #3, at present.
The company is set to report third-quarter fiscal 2021 results on May 19. The Zacks Consensus Estimate for quarterly earnings has remained steady at 82 cents per share over the past 30 days.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Image: Shutterstock
5 Prominent Tech Stocks Displaying Earnings Beat Potential
The technology sector’s first-quarter performance, so far, has been dominated by gains from robust demand for tech-ridden digitization solutions, courtesy of the ongoing momentum in coronavirus crisis-induced work-from-home and learn-from-home trends.
Solid uptick in cloud-computing solutions and Internet services, increasing demand for high-compute capabilities’ processors, and growing proliferation of AI and machine learning have been benefiting the technology sector, which has been extremely resilient to the impact of COVID-19-induced disruptions.
Moreover, the work-and-learn-from-home necessity has fueled demand for PCs, notebooks, peripheral accessories and cloud storage as reflected in improving trend in PC shipments.
Incidentally, a strong PC market highlights the need for advanced processors in sleek enterprise laptops, which bodes well for the semiconductor companies. Also, short supply of chips has opened up new avenues in this space.
In fact, according to data from the Semiconductor Industry Association (SIA), worldwide sales of semiconductors hit $123.1 billion during first-quarter 2021, up 3.6% sequentially and 17.8% on a year-over-year basis.
Per John Neuffer, SIA president and CEO, as stated on Mar 1, “Global semiconductor production is on the rise to meet increasing demand and ease the ongoing chip shortage affecting the auto sector and others, and annual sales are projected to increase in 2021.”
Further, continuing work-from-home and online learning wave kept demand for remote-working tech, including advanced technology-based virtual meetings and conference tools, cloud services and cybersecurity solutions high in the quarter under review.
Besides strengthening user penetration for online payment and delivery services, increasing proliferation of IoT and growing clout of cloud-based applications have been driving the sector of late. All of these, in turn, are fueling growth for high-speed Internet services.
Likewise, an e-commerce boom prompted by changing consumer behavior is expected to have contributed to top-line growth. Further, a rebound in the automotive space and uptick in manufacturing amid accelerated deployment of 5G worldwide have been acting as tailwinds.
How to Decisively Make the Right Pick?
As of May 4, 79.5% of the technology sector’s market capitalization in the S&P 500 index had reported first-quarter results. Total earnings for these Tech companies are up +56.7% from the same period last year on +23.3% higher revenues, with 95.3% of the companies beating EPS estimates and 93.0% beating revenue estimates.
Meanwhile, 343 S&P 500 members or 69% of the index’s total membership had reported first-quarter results as of May 4. Total earnings (or aggregate net income) for these 343 companies are up +49.2% on +10.6% higher revenues, with 87.5% beating EPS estimates and 78.1% beating revenue estimates.
It makes sense to invest in alluring technology sector, which is outperforming the broader market on the heels of demand strength and expanding growth avenues.
With the majority of industry players having released earnings, investors now looking to make the most of this reporting cycle are awaiting the results from companies which usually report after the busy period of the earnings season.
However, in the backdrop of captivating prospects, finding the technology stocks having the potential to beat earnings estimates can be daunting. Our proprietary methodology, however, makes it fairly simple.
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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP is our proprietary methodology for determining stocks, which have the best chances to surprise with their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this apt combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Best Stocks Worth Considering
Given below are five technology stocks that have the right combination of elements to beat on earnings this reporting cycle:
Domiciled in Palo Alto, CA, HP Inc. (HPQ - Free Report) has an Earnings ESP of +4.49% and a Zacks Rank #2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.
HP Inc. Price and EPS Surprise
HP Inc. price-eps-surprise | HP Inc. Quote
The company is slated to report second-quarter fiscal 2021 results on May 27. The Zacks Consensus Estimate for earnings has been revised upward by a penny to 89 cents per share in the past 30 days.
Santa Clara, CA-headquartered NVIDIA Corporation (NVDA - Free Report) has an Earnings ESP of +2.51% and a Zacks Rank #2, at present.
NVIDIA Corporation Price and EPS Surprise
NVIDIA Corporation price-eps-surprise | NVIDIA Corporation Quote
The company is scheduled to release first-quarter fiscal 2022 results on May 26. The Zacks Consensus Estimate for quarterly earnings has moved north by 4 cents to $3.26 per share over the past 30 days.
Santa Clara, CA-based Agilent Technologies, Inc. (A - Free Report) has an Earnings ESP of +1.57% and a Zacks Rank #2, currently.
Agilent Technologies, Inc. Price and EPS Surprise
Agilent Technologies, Inc. price-eps-surprise | Agilent Technologies, Inc. Quote
The company is slated to report second-quarter fiscal 2021 results on May 25. The Zacks Consensus Estimate for earnings has been revised upward by a penny to 82 cents per share in the past 30 days.
Based in Mountain View, CA, Pure Storage, Inc. (PSTG - Free Report) has an Earnings ESP of +10.81% and a Zacks Rank #2, at present.
Pure Storage, Inc. Price and EPS Surprise
Pure Storage, Inc. price-eps-surprise | Pure Storage, Inc. Quote
The company is scheduled to release first-quarter fiscal 2022 results on May 26. The Zacks Consensus Estimate for the bottom line has remained steady at a loss of 7 cents over the past 30 days.
Headquartered in San Jose, CA, Cisco Systems, Inc. (CSCO - Free Report) has an Earnings ESP of +0.52% and a Zacks Rank #3, at present.
Cisco Systems, Inc. Price and EPS Surprise
Cisco Systems, Inc. price-eps-surprise | Cisco Systems, Inc. Quote
The company is set to report third-quarter fiscal 2021 results on May 19. The Zacks Consensus Estimate for quarterly earnings has remained steady at 82 cents per share over the past 30 days.
+1,500% Growth: One of 2021’s Most Exciting Investment Opportunities
In addition to the stocks you read about above, would you like to see Zacks’ top picks to capitalize on the Internet of Things (IoT)? It is one of the fastest-growing technologies in history, with an estimated 77 billion devices to be connected by 2025. That works out to 127 new devices per second.
Zacks has released a special report to help you capitalize on the Internet of Things’s exponential growth. It reveals 4 under-the-radar stocks that could be some of the most profitable holdings in your portfolio in 2021 and beyond.
Click here to download this report FREE >>