This 1 Computer & Tech Stock Can Beat Earnings: Why It Should Be On Your Radar – Jul 29, 2022

Quarterly financial reports play a vital role on Wall Street because they help investors see how a company has performed and what may happen in the near future. And of all the metrics and results to consider, revenue is one of the most important.

The win figure itself is key, of course, but a win 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 hit could help the stock move higher 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 increase their returns using the Zacks Earnings ESP filter.

Zacks Earnings ESP Explained

Zacks’ ESP, or Expected Surprise Forecast, aims to detect earnings surprises by focusing on the latest analyst revisions. The basic premise is that if an analyst re-estimates his earnings forecast before the earnings release, that means he probably has new information that could 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 estimate. The Zacks Rank is also included in the ESP metric to better help find companies that look poised to exceed their next consensus estimate, which will hopefully help drive the share price higher.

In fact, when we combined a Zacks Rank #3 (Hold) or better and a positive earnings ESP, the stock produced a positive surprise 70% of the time. Perhaps most importantly, using these parameters has helped produce an average 28.3% annualized return, according to our 10-year benchmark.

Stocks ranked #3 (hold), 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) rankings, or the top 15% and top 5% of stocks, respectively, should outperform the market. Strong Buy stocks should outperform any other rank.

Should you consider modern micro devices?

Now that we understand what ESP is and how useful it can be, let’s dive into stocks that currently qualify. Advanced Micro Devices (AMD Free Report) earns #3 (hold) right now and its best estimate is $1.05 per share, just four days out from its upcoming earnings release on August 2, 2022.

Advanced Micro Devices ESP’s earnings stood at +1.66%, which, as explained above, is calculated by taking the percentage difference between the best estimate of $1.05 and the Zacks Consensus Estimate of $1.03. AMD is also part of a large group of stocks that boast a positive ESP. Make sure you use our ESP Earnings Filter to find the best stocks to buy or sell before they are reported.

AMD is part of a large group of computer and technology company stocks that boast a positive ESP and investors may want to take a look atlasian (TEAM Free Report) as well.

Atlassian is a Zacks Rank #3 (Hold) stock and is set to report earnings on August 4, 2022. TEAM’s best estimate is $0.27 per share six days after the next earnings release.

For Atlassian, the percentage difference between its best estimate and the Zacks Consensus Estimate of $0.26 is +1.92%.

With both stocks holding positive earnings ESP, AMD and TEAM could potentially post earnings in their next reports.

Find stocks to buy or sell before they are listed

Use the Zacks Earnings ESP filter to find stocks most likely to be positive or negative surprises to buy or sell before being reported for a profitable seasonal earnings trade. Check it out here >>

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