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These 2 Computer and Technology Stocks Could Beat Earnings: Why They Should Be on Your Radar
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Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 Cadence Design Systems?
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. Cadence Design Systems (CDNS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.38 a share, just 12 days from its upcoming earnings release on February 12, 2024.
By taking the percentage difference between the $1.38 Most Accurate Estimate and the $1.34 Zacks Consensus Estimate, Cadence Design Systems has an Earnings ESP of +2.88%. Investors should also know that CDNS 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.
CDNS is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Lam Research (LRCX - Free Report) .
Lam Research, which is readying to report earnings on April 17, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $7.26 a share, and LRCX is 77 days out from its next earnings report.
For Lam Research, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $7.13 is +1.8%.
CDNS and LRCX's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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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These 2 Computer and Technology Stocks Could Beat Earnings: Why They Should Be on Your Radar
Two factors often determine stock prices in the long run: earnings and interest rates. Investors can't control the latter, but they can focus on a company's earnings results every quarter.
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.
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 Cadence Design Systems?
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. Cadence Design Systems (CDNS - Free Report) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $1.38 a share, just 12 days from its upcoming earnings release on February 12, 2024.
By taking the percentage difference between the $1.38 Most Accurate Estimate and the $1.34 Zacks Consensus Estimate, Cadence Design Systems has an Earnings ESP of +2.88%. Investors should also know that CDNS 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.
CDNS is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Lam Research (LRCX - Free Report) .
Lam Research, which is readying to report earnings on April 17, 2024, sits at a Zacks Rank #2 (Buy) right now. It's Most Accurate Estimate is currently $7.26 a share, and LRCX is 77 days out from its next earnings report.
For Lam Research, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $7.13 is +1.8%.
CDNS and LRCX's positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.
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 >>