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, 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 even higher.
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.
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. Flex (FLEX) earns a Zacks Rank #2 right now and its Most Accurate Estimate sits at $0.65 a share, just one day from its upcoming earnings release on January 29, 2025.
Flex’s Earnings ESP sits at 2.09%, which, as explained above, is calculated by taking the percentage difference between the $0.65 Most Accurate Estimate and the Zacks Consensus Estimate of $0.64.
FLEX 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 Alphabet (GOOGL) as well.
Alphabet is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on February 4, 2025. GOOGL’s Most Accurate Estimate sits at $2.25 a share seven days from its next earnings release.
The Zacks Consensus Estimate for Alphabet is $2.12, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 5.96%.
FLEX and GOOGL’s positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.
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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