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

Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

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.

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.

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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. Super Micro Computer (SMCI) earns a Zacks Rank #3 right now and its Most Accurate Estimate sits at $6.94 a share, just 29 days from its upcoming earnings release on May 7, 2024.

SMCI has an Earnings ESP figure of 16.35%, which, as explained above, is calculated by taking the percentage difference between the $6.94 Most Accurate Estimate and the Zacks Consensus Estimate of $5.97.

SMCI is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Carrier Global (CARR).

Carrier Global, which is readying to report earnings on April 25, 2024, sits at a Zacks Rank #3 (Hold) right now. It's Most Accurate Estimate is currently $0.50 a share, and CARR is 17 days out from its next earnings report.

The Zacks Consensus Estimate for Carrier Global is $0.50, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.44%.

Because both stocks hold a positive Earnings ESP, SMCI and CARR could potentially post earnings beats in their next reports.

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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Super Micro Computer, Inc. (SMCI) : Free Stock Analysis Report

Carrier Global Corporation (CARR) : Free Stock Analysis Report

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Zacks Investment Research