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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
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Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
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.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Paycom Software?
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. Paycom Software (PAYC - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.63 a share, just 12 days from its upcoming earnings release on August 1, 2023.
Paycom Software's Earnings ESP sits at +1.88%, which, as explained above, is calculated by taking the percentage difference between the $1.63 Most Accurate Estimate and the Zacks Consensus Estimate of $1.60. PAYC is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
PAYC is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Meta Platforms (META - Free Report) .
Slated to report earnings on July 26, 2023, Meta Platforms holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.02 a share six days from its next quarterly update.
Meta Platforms' Earnings ESP figure currently stands at +5.89% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.85.
PAYC and META'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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Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now
Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what might be coming down the road in the near-term. And out of all of the metrics and results to consider, earnings is one of the most important.
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.
Now that we know how important earnings and earnings surprises are, it's time to show investors how to take advantage of these events to boost their returns by utilizing the Zacks Earnings ESP filter.
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.
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.
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.
Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.
Should You Consider Paycom Software?
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. Paycom Software (PAYC - Free Report) earns a #2 (Buy) right now and its Most Accurate Estimate sits at $1.63 a share, just 12 days from its upcoming earnings release on August 1, 2023.
Paycom Software's Earnings ESP sits at +1.88%, which, as explained above, is calculated by taking the percentage difference between the $1.63 Most Accurate Estimate and the Zacks Consensus Estimate of $1.60. PAYC is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.
PAYC is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Meta Platforms (META - Free Report) .
Slated to report earnings on July 26, 2023, Meta Platforms holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $3.02 a share six days from its next quarterly update.
Meta Platforms' Earnings ESP figure currently stands at +5.89% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $2.85.
PAYC and META'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 >>