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How to Find Strong Computer and Technology Stocks Slated for Positive Earnings Surprises
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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 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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Alphabet?
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. Alphabet (GOOGL - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.64 a share, just seven days from its upcoming earnings release on January 30, 2024.
By taking the percentage difference between the $1.64 Most Accurate Estimate and the $1.60 Zacks Consensus Estimate, Alphabet has an Earnings ESP of +2.26%. Investors should also know that GOOGL 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.
GOOGL is just one of a large group of Computer and Technology stocks with a positive ESP figure. Super Micro Computer (SMCI - Free Report) is another qualifying stock you may want to consider.
Super Micro Computer, which is readying to report earnings on January 29, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $5.48 a share, and SMCI is six days out from its next earnings report.
Super Micro Computer's Earnings ESP figure currently stands at +8.19% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.07.
GOOGL and SMCI's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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How to Find Strong Computer and Technology Stocks Slated for Positive Earnings Surprises
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 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.
With this in mind, the Expected Surprise Prediction compares the Most Accurate Estimate (being the most recent) against the overall Zacks Consensus Estimate. The percentage difference provides the ESP figure. The system also utilizes our core Zacks Rank to provide a stronger system for identifying stocks that might beat their next quarterly earnings estimate and possibly see the stock price climb.
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 Alphabet?
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. Alphabet (GOOGL - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.64 a share, just seven days from its upcoming earnings release on January 30, 2024.
By taking the percentage difference between the $1.64 Most Accurate Estimate and the $1.60 Zacks Consensus Estimate, Alphabet has an Earnings ESP of +2.26%. Investors should also know that GOOGL 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.
GOOGL is just one of a large group of Computer and Technology stocks with a positive ESP figure. Super Micro Computer (SMCI - Free Report) is another qualifying stock you may want to consider.
Super Micro Computer, which is readying to report earnings on January 29, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $5.48 a share, and SMCI is six days out from its next earnings report.
Super Micro Computer's Earnings ESP figure currently stands at +8.19% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $5.07.
GOOGL and SMCI's positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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 >>