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This 1 Computer and Technology Stock Could Beat Earnings: Why It 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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
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 is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Arista Networks?
The final step today is to look at a stock that meets our ESP qualifications. Arista Networks (ANET - Free Report) earns a #1 (Strong Buy) 18 days from its next quarterly earnings release on October 31, 2022, and its Most Accurate Estimate comes in at $1.06 a share.
ANET has an Earnings ESP figure of +1.27%, which, as explained above, is calculated by taking the percentage difference between the $1.06 Most Accurate Estimate and the Zacks Consensus Estimate of $1.05. Arista Networks is one of a large database 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.
ANET is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Twilio (TWLO - Free Report) .
Slated to report earnings on November 3, 2022, Twilio holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.37 a share 21 days from its next quarterly update.
Twilio's Earnings ESP figure currently stands at +4.52% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.39.
ANET and TWLO'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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This 1 Computer and Technology Stock Could Beat Earnings: Why It 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.
We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.
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 is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete 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.
When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% 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 Arista Networks?
The final step today is to look at a stock that meets our ESP qualifications. Arista Networks (ANET - Free Report) earns a #1 (Strong Buy) 18 days from its next quarterly earnings release on October 31, 2022, and its Most Accurate Estimate comes in at $1.06 a share.
ANET has an Earnings ESP figure of +1.27%, which, as explained above, is calculated by taking the percentage difference between the $1.06 Most Accurate Estimate and the Zacks Consensus Estimate of $1.05. Arista Networks is one of a large database 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.
ANET is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Twilio (TWLO - Free Report) .
Slated to report earnings on November 3, 2022, Twilio holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.37 a share 21 days from its next quarterly update.
Twilio's Earnings ESP figure currently stands at +4.52% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.39.
ANET and TWLO'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 >>