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Want Better Returns? Don?t Ignore These 2 Computer and Technology 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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Oracle?
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. Oracle (ORCL - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.23 a share, just 28 days from its upcoming earnings release on March 9, 2023.
ORCL has an Earnings ESP figure of +3.15%, which, as explained above, is calculated by taking the percentage difference between the $1.23 Most Accurate Estimate and the Zacks Consensus Estimate of $1.19. Oracle is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
ORCL is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Cisco Systems (CSCO - Free Report) as well.
Slated to report earnings on February 15, 2023, Cisco Systems holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.87 a share six days from its next quarterly update.
For Cisco Systems, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.86 is +1.66%.
Because both stocks hold a positive Earnings ESP, ORCL and CSCO could potentially post earnings beats in their next reports.
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 >>
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Want Better Returns? Don?t Ignore These 2 Computer and Technology 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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. 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.
Bringing together a positive earnings ESP alongside a Zacks Rank #3 (Hold) or better has helped stocks report a positive earnings surprise 70% of the time. Furthermore, by using these parameters, investors have seen 28.3% annual returns on average, according to our 10 year backtest.
Stocks with a #3 (Hold) ranking, which is most stocks covered at 60%, are expected to perform in-line with the broader market. But stocks that fall into the #2 (Buy) and #1 (Strong Buy) ranking, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform more than any other rank.
Should You Consider Oracle?
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. Oracle (ORCL - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.23 a share, just 28 days from its upcoming earnings release on March 9, 2023.
ORCL has an Earnings ESP figure of +3.15%, which, as explained above, is calculated by taking the percentage difference between the $1.23 Most Accurate Estimate and the Zacks Consensus Estimate of $1.19. Oracle is one of a large database of stocks with positive ESPs. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
ORCL is part of a big group of Computer and Technology stocks that boast a positive ESP, and investors may want to take a look at Cisco Systems (CSCO - Free Report) as well.
Slated to report earnings on February 15, 2023, Cisco Systems holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.87 a share six days from its next quarterly update.
For Cisco Systems, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.86 is +1.66%.
Because both stocks hold a positive Earnings ESP, ORCL and CSCO could potentially post earnings beats in their next reports.
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 >>