How to Find Strong Computer and Technology Stocks Slated for Positive Earnings Surprises

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.

Life and the stock market are both about expectations, and rising above what is expected is often rewarded, while falling short can come with negative consequences. Investors might want to try to capture stronger returns by finding positive earnings surprises.

2 Stocks to Add to Your Watchlist

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. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

The final step today is to look at a stock that meets our ESP qualifications. Twilio (TWLO) earns a Zacks Rank #1 16 days from its next quarterly earnings release on August 1, 2024, and its Most Accurate Estimate comes in at $0.73 a share.

By taking the percentage difference between the $0.73 Most Accurate Estimate and the $0.71 Zacks Consensus Estimate, Twilio has an Earnings ESP of 2.34%.

TWLO 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 ViaSat (VSAT) as well.

ViaSat, which is readying to report earnings on August 14, 2024, sits at a Zacks Rank #3 (Hold) right now. It’s Most Accurate Estimate is currently -$0.21 a share, and VSAT is 29 days out from its next earnings report.

ViaSat’s Earnings ESP figure currently stands at 50% after taking the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.42.

TWLO and VSAT’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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