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How to Find Strong Computer and Technology Stocks Slated for Positive Earnings Surprises
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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.
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
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 Silicon Motion?
The final step today is to look at a stock that meets our ESP qualifications. Silicon Motion (SIMO - Free Report) earns a #2 (Buy) six days from its next quarterly earnings release on August 1, 2024, and its Most Accurate Estimate comes in at $0.97 a share.
Silicon Motion's Earnings ESP sits at +2.32%, which, as explained above, is calculated by taking the percentage difference between the $0.97 Most Accurate Estimate and the Zacks Consensus Estimate of $0.95. SIMO 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.
SIMO 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 Carrier Global (CARR - Free Report) as well.
Carrier Global is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 24, 2024. CARR's Most Accurate Estimate sits at $0.90 a share 90 days from its next earnings release.
For Carrier Global, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.90 is +0.45%.
SIMO and CARR'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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How to Find Strong Computer and Technology Stocks Slated for Positive Earnings Surprises
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.
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.
The ability to identify stocks that are likely to top quarterly earnings expectations can be profitable, but it's no simple task. Here at Zacks, our Earnings ESP filter helps make things easier.
The Zacks Earnings ESP, Explained
The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate.
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.
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 Silicon Motion?
The final step today is to look at a stock that meets our ESP qualifications. Silicon Motion (SIMO - Free Report) earns a #2 (Buy) six days from its next quarterly earnings release on August 1, 2024, and its Most Accurate Estimate comes in at $0.97 a share.
Silicon Motion's Earnings ESP sits at +2.32%, which, as explained above, is calculated by taking the percentage difference between the $0.97 Most Accurate Estimate and the Zacks Consensus Estimate of $0.95. SIMO 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.
SIMO 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 Carrier Global (CARR - Free Report) as well.
Carrier Global is a Zacks Rank #3 (Hold) stock, and is getting ready to report earnings on October 24, 2024. CARR's Most Accurate Estimate sits at $0.90 a share 90 days from its next earnings release.
For Carrier Global, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.90 is +0.45%.
SIMO and CARR'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 >>