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5 Technology Stocks Poised to Beat Earnings Estimates in Q3
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The technology sector had a tough third-quarter 2022 due to challenging global macro-economic conditions, semiconductor chip shortage, supply-chain constraints, raging inflation, unfavorable forex due to a strong U.S. dollar and the increasingly hawkish stance of the U.S. Federal Reserve.
Technology giants like Microsoft and Alphabet reported unenthusiastic earnings results, while Meta Platforms disappointed.
Apple was exceptional, reporting strong fiscal fourth-quarter results, with record revenues and earnings, driven by steady sales of iPhone and a jump in Mac sales (25.4% year over year) despite slumping PC shipments globally.
Per Gartner’s latest report, 68 million PCs were shipped in the third quarter (ended in September) of 2022, down 19.5% from the year-ago period. Lenovo, HP and Dell Technologies witnessed 15.3%, 27.9% and 21.1% declines, respectively. Apple witnessed a 15.6% decline, much better than HP and Dell.
PC shipment declines, along with slowing cloud business, negatively impacted Microsoft’s first-quarter fiscal 2023 results.
Alphabet also cautioned about slowing cloud growth. The Google parent witnessed sluggishness in YouTube ads and Google Network due to a slowdown in digital advertisement that also severely impacted its peer Meta Platforms.
Meta’s third-quarter 2022 advertising revenues (down 3.7% year over year) suffered from weak advertising demand. The healthcare and travel verticals were the largest positive contributors to ad revenue growth in the reported quarter, fully offset by weakness in online commerce, gaming and financial services.
Upcoming Earnings to Watch
A chunk of technology companies is set to report their earnings results over the next couple of weeks. Although they are expected to have faced the issues plaguing the technology sector this earnings season, we believe that several are well-poised to beat earnings estimates. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Nevertheless, finding technology stocks with 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 combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
Five technology stocks mentioned below have the right combination of elements to beat on earnings this reporting cycle:
The company is scheduled to report third-quarter 2022 results on Nov 1. The Zacks Consensus Estimate for its earnings has moved up 2.1% to $1.46 per share over the past 30 days.
The Zacks Consensus Estimate for its earnings has been unchanged at 27 cents per share over the past month.
San Ramon, CA-based Five9 (FIVN - Free Report) has a Zacks Rank of 2 and an Earnings ESP of +7.04%. The company is scheduled to report third-quarter 2022 results on Nov 7.
The Zacks Consensus Estimate for its earnings has been revised 12.5% up to 36 cents per share over the past 30 days.
Ventura, CA-based The Trade Desk (TTD - Free Report) currently has a Zacks Rank #2 and an Earnings ESP of +2.13%.
The company is set to report third-quarter 2022 results on Nov 9. The consensus mark for earnings has risen by a penny to 24 cents per share over the past 30 days.
Vancouver, WA-based ZoomInfo (ZI - Free Report) is set to report third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +1.27% and a Zacks Rank of 2.
Image: Bigstock
5 Technology Stocks Poised to Beat Earnings Estimates in Q3
The technology sector had a tough third-quarter 2022 due to challenging global macro-economic conditions, semiconductor chip shortage, supply-chain constraints, raging inflation, unfavorable forex due to a strong U.S. dollar and the increasingly hawkish stance of the U.S. Federal Reserve.
Technology giants like Microsoft and Alphabet reported unenthusiastic earnings results, while Meta Platforms disappointed.
Apple was exceptional, reporting strong fiscal fourth-quarter results, with record revenues and earnings, driven by steady sales of iPhone and a jump in Mac sales (25.4% year over year) despite slumping PC shipments globally.
Per Gartner’s latest report, 68 million PCs were shipped in the third quarter (ended in September) of 2022, down 19.5% from the year-ago period. Lenovo, HP and Dell Technologies witnessed 15.3%, 27.9% and 21.1% declines, respectively. Apple witnessed a 15.6% decline, much better than HP and Dell.
PC shipment declines, along with slowing cloud business, negatively impacted Microsoft’s first-quarter fiscal 2023 results.
Alphabet also cautioned about slowing cloud growth. The Google parent witnessed sluggishness in YouTube ads and Google Network due to a slowdown in digital advertisement that also severely impacted its peer Meta Platforms.
Meta’s third-quarter 2022 advertising revenues (down 3.7% year over year) suffered from weak advertising demand. The healthcare and travel verticals were the largest positive contributors to ad revenue growth in the reported quarter, fully offset by weakness in online commerce, gaming and financial services.
Upcoming Earnings to Watch
A chunk of technology companies is set to report their earnings results over the next couple of weeks. Although they are expected to have faced the issues plaguing the technology sector this earnings season, we believe that several are well-poised to beat earnings estimates. Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Nevertheless, finding technology stocks with 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 combination of ingredients, the odds of a positive earnings surprise are as high as 70%.
Top Bets
Five technology stocks mentioned below have the right combination of elements to beat on earnings this reporting cycle:
San Francisco, CA-based Airbnb (ABNB - Free Report) has an Earnings ESP of +0.81% and currently flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is scheduled to report third-quarter 2022 results on Nov 1. The Zacks Consensus Estimate for its earnings has moved up 2.1% to $1.46 per share over the past 30 days.
Airbnb, Inc. Price and EPS Surprise
Airbnb, Inc. price-eps-surprise | Airbnb, Inc. Quote
Sunnyvale, CA-based Fortinet (FTNT - Free Report) is scheduled to report third-quarter 2022 results on Nov 2.
The company has a Zacks Rank #2 and an Earnings ESP of +2.44%.
Fortinet, Inc. Price and EPS Surprise
Fortinet, Inc. price-eps-surprise | Fortinet, Inc. Quote
The Zacks Consensus Estimate for its earnings has been unchanged at 27 cents per share over the past month.
San Ramon, CA-based Five9 (FIVN - Free Report) has a Zacks Rank of 2 and an Earnings ESP of +7.04%. The company is scheduled to report third-quarter 2022 results on Nov 7.
The Zacks Consensus Estimate for its earnings has been revised 12.5% up to 36 cents per share over the past 30 days.
Five9, Inc. Price and EPS Surprise
Five9, Inc. price-eps-surprise | Five9, Inc. Quote
Ventura, CA-based The Trade Desk (TTD - Free Report) currently has a Zacks Rank #2 and an Earnings ESP of +2.13%.
The company is set to report third-quarter 2022 results on Nov 9. The consensus mark for earnings has risen by a penny to 24 cents per share over the past 30 days.
The Trade Desk Price and EPS Surprise
The Trade Desk price-eps-surprise | The Trade Desk Quote
Vancouver, WA-based ZoomInfo (ZI - Free Report) is set to report third-quarter 2022 results on Nov 1. The company has an Earnings ESP of +1.27% and a Zacks Rank of 2.
ZoomInfo Technologies Inc. Price and EPS Surprise
ZoomInfo Technologies Inc. price-eps-surprise | ZoomInfo Technologies Inc. Quote
The consensus estimate for its earnings has been unchanged at 20 cents per share over the past 30 days.