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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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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.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 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 BILL Holdings?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. BILL Holdings (BILL - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.44 a share 30 days away from its upcoming earnings release on August 17, 2023.
By taking the percentage difference between the $0.44 Most Accurate Estimate and the $0.41 Zacks Consensus Estimate, BILL Holdings has an Earnings ESP of +7.61%. Investors should also know that BILL is one of a large group 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.
BILL is just one of a large group of Computer and Technology stocks with a positive ESP figure. Shopify (SHOP - Free Report) is another qualifying stock you may want to consider.
Shopify, which is readying to report earnings on August 2, 2023, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.11 a share, and SHOP is 15 days out from its next earnings report.
The Zacks Consensus Estimate for Shopify is $0.06, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +86.34%.
Because both stocks hold a positive Earnings ESP, BILL and SHOP 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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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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.
The earnings figure itself is key, of course, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb and vice versa.
Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.
The Zacks Earnings ESP, Explained
The Zacks Expected Surprise Prediction, or ESP, works by locking in on the most up-to-date analyst earnings revisions because they can be more accurate than estimates from weeks or even months before the actual release date. The thinking is pretty straightforward: analysts who provide earnings estimates closer to the report are likely to have more information.
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.
In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce 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 BILL Holdings?
The last thing we will do today, now that we have a grasp on the ESP and how powerful of a tool it can be, is to quickly look at a qualifying stock. BILL Holdings (BILL - Free Report) holds a #2 (Buy) at the moment and its Most Accurate Estimate comes in at $0.44 a share 30 days away from its upcoming earnings release on August 17, 2023.
By taking the percentage difference between the $0.44 Most Accurate Estimate and the $0.41 Zacks Consensus Estimate, BILL Holdings has an Earnings ESP of +7.61%. Investors should also know that BILL is one of a large group 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.
BILL is just one of a large group of Computer and Technology stocks with a positive ESP figure. Shopify (SHOP - Free Report) is another qualifying stock you may want to consider.
Shopify, which is readying to report earnings on August 2, 2023, sits at a Zacks Rank #1 (Strong Buy) right now. It's Most Accurate Estimate is currently $0.11 a share, and SHOP is 15 days out from its next earnings report.
The Zacks Consensus Estimate for Shopify is $0.06, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of +86.34%.
Because both stocks hold a positive Earnings ESP, BILL and SHOP 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 >>