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5 Technology Stocks Set to Beat Estimates in Q2 Earnings
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Technology stocks are anticipated to see a sluggish second-quarter 2019, primarily due to softness in the semiconductor space.
Semiconductors, which are the building blocks of most emerging technologies like AI and IoT, reported weak sales in April and May. The downside can be attributed to declining memory prices (both DRAM and NAND) and lower demand from smartphone OEMs.
Moreover, tariffs on electronics due to the U.S.-China trade war negatively impacted demand for chips. Additionally, restriction on sales to Huawei also dampened results of companies like Micron (MU - Free Report) and Samsung.
Also, sluggishness in the PC market has been a headwind. Although consumers are rapidly retiring their PCs, replacement seems to have taken a backseat, inducing a fall in PC shipments.
Further, server market growth is expected to suffer due to lower demand from enterprise buyers and hyperscale companies. The weak China market is a major headwind as well.
Growth Drivers Aplenty
Nevertheless, rapid adoption of cloud computing, AI, IoT, cloud-based gaming, wearables and drones is expected to drive growth for tech companies, which offer non-volatile memory and sensors needed for connected and smart home devices.
Additionally, the emergence of virtual assistants with AI techniques continues to drive demand for smart speakers like Amazon Echo and Google Home.
Moreover, increasing allegiance to online gaming, music and video-streaming services is a major growth driver. Improvement in Internet speed and penetration globally deserves a special mention in this regard.
Further, proliferation of IoT, which is facilitating connected devices and smart homes, is a key catalyst. The accelerated deployment of 5G technology — the next-generation of wireless connectivity — is also likely to spur growth.
How to Make the Right Pick?
With the existence of a number of industry players, finding the right technology stocks that have 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, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Given below are five technology stocks that have the right combination of elements to post an earnings beat this reporting cycle:
San Francisco, CA-based Square (SQ - Free Report) has a Zacks Rank #2 and an Earnings ESP of +5.31%. The company is scheduled to report second-quarter 2019 results on Aug 1.
The consensus mark for earnings has stayed at 16 cents over the past 30 days.
Cupertino, CA-based Apple (AAPL - Free Report) has a Zacks Rank #3 and an Earnings ESP of +5.56%.
The company is scheduled to report third-quarter fiscal 2019 results on Jul 30. The consensus mark for earnings has increased by a couple of cents to $2.12 over the past 30 days.
Milpitas, CA-based FireEye has a Zacks Rank #3 and an Earnings ESP of +33.33%.
The company is set to report second-quarter 2019 results on Jul 30. The consensus mark for earnings has been unchanged at 1 cent over the past 30 days.
Fremont, CA-based Lam Research (LRCX - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.91%. The company is scheduled to report fourth-quarter fiscal 2019 results on Jul 31.
The Zacks Consensus Estimate for earnings has stayed at $3.40 over the past month.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
5 Technology Stocks Set to Beat Estimates in Q2 Earnings
Technology stocks are anticipated to see a sluggish second-quarter 2019, primarily due to softness in the semiconductor space.
Semiconductors, which are the building blocks of most emerging technologies like AI and IoT, reported weak sales in April and May. The downside can be attributed to declining memory prices (both DRAM and NAND) and lower demand from smartphone OEMs.
Moreover, tariffs on electronics due to the U.S.-China trade war negatively impacted demand for chips. Additionally, restriction on sales to Huawei also dampened results of companies like Micron (MU - Free Report) and Samsung.
Also, sluggishness in the PC market has been a headwind. Although consumers are rapidly retiring their PCs, replacement seems to have taken a backseat, inducing a fall in PC shipments.
Further, server market growth is expected to suffer due to lower demand from enterprise buyers and hyperscale companies. The weak China market is a major headwind as well.
Growth Drivers Aplenty
Nevertheless, rapid adoption of cloud computing, AI, IoT, cloud-based gaming, wearables and drones is expected to drive growth for tech companies, which offer non-volatile memory and sensors needed for connected and smart home devices.
Additionally, the emergence of virtual assistants with AI techniques continues to drive demand for smart speakers like Amazon Echo and Google Home.
Moreover, increasing allegiance to online gaming, music and video-streaming services is a major growth driver. Improvement in Internet speed and penetration globally deserves a special mention in this regard.
Further, proliferation of IoT, which is facilitating connected devices and smart homes, is a key catalyst. The accelerated deployment of 5G technology — the next-generation of wireless connectivity — is also likely to spur growth.
How to Make the Right Pick?
With the existence of a number of industry players, finding the right technology stocks that have 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, the chance of a positive earnings surprise is as high as 70%.
Our Choices
Given below are five technology stocks that have the right combination of elements to post an earnings beat this reporting cycle:
Stockholm, Sweden-based Ericsson (ERIC - Free Report) is set to report second-quarter 2019 results on Jul 17. The company has an Earnings ESP of +4.35% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for earnings has been steady at 8 cents over the past 30 days.
Ericsson Price and EPS Surprise
Ericsson price-eps-surprise | Ericsson Quote
San Francisco, CA-based Square (SQ - Free Report) has a Zacks Rank #2 and an Earnings ESP of +5.31%. The company is scheduled to report second-quarter 2019 results on Aug 1.
The consensus mark for earnings has stayed at 16 cents over the past 30 days.
Square, Inc. Price and EPS Surprise
Square, Inc. price-eps-surprise | Square, Inc. Quote
Cupertino, CA-based Apple (AAPL - Free Report) has a Zacks Rank #3 and an Earnings ESP of +5.56%.
The company is scheduled to report third-quarter fiscal 2019 results on Jul 30. The consensus mark for earnings has increased by a couple of cents to $2.12 over the past 30 days.
Apple Inc. Price and EPS Surprise
Apple Inc. price-eps-surprise | Apple Inc. Quote
Milpitas, CA-based FireEye has a Zacks Rank #3 and an Earnings ESP of +33.33%.
The company is set to report second-quarter 2019 results on Jul 30. The consensus mark for earnings has been unchanged at 1 cent over the past 30 days.
FireEye, Inc. Price and EPS Surprise
FireEye, Inc. price-eps-surprise | FireEye, Inc. Quote
Fremont, CA-based Lam Research (LRCX - Free Report) has a Zacks Rank #3 and an Earnings ESP of +0.91%. The company is scheduled to report fourth-quarter fiscal 2019 results on Jul 31.
The Zacks Consensus Estimate for earnings has stayed at $3.40 over the past month.
Lam Research Corporation Price and EPS Surprise
Lam Research Corporation price-eps-surprise | Lam Research Corporation Quote
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>