This 1 Computer and Tech Stock Could Beat Earnings: Why It Should Be on Your Radar – July 29, 2022

Quarterly financial reports play a vital role on Wall Street, as they help investors see how a company has performed and what could happen in the near term. And of all the metrics and results to consider, earnings are one of the most important.

The earnings figure itself is critical, of course, but a beat or a mistake 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 rise and vice versa.

Now that we know how important earnings and earnings surprises are, it’s time to show investors how to leverage these events to boost their returns using the Zacks Earnings ESP filter.

The Zacks ESP Earnings, Explained

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the latest analyst reviews. The basic premise is that if an analyst re-evaluates their earnings estimate before earnings are released, it probably means they have new information that could be more accurate.

The core of the ESP model is to compare the more accurate estimate with the Zacks consensus estimate, where the resulting percentage difference between the two equals the expected surprise forecast. The Zacks Rank is also factored into the ESP metric to better help find companies that appear ready to surpass their next consensus estimate of profits, which will hopefully help lift the share price.

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

Titles with a ranking of no. 3 (Hold), which is the majority of the securities hedged at 60%, will perform in line with the broader market. But the stocks that fall into the No. 2 (purchase) and n. 1 (strong buy), or the top 15% and the top 5% of stocks respectively, should outperform the market. Strong Buy stocks should outperform more than any other ranking.

Should you consider advanced micro devices?

Now that we understand what ESP is and how profitable it can be, let’s dive into a stock that currently fits the bill. Advanced microdevices (AMD Free report) earns a # 3 (Hold) right now and its most accurate estimate is at $ 1.05 per share, just four days of its upcoming earnings release on August 2, 2022.

Advanced Micro Devices’ Earnings ESP stands at + 1.66%, which, as explained above, is calculated by taking the percentage difference between the more accurate estimate of $ 1.05 and the Zacks consensus estimate of $ 1.03. AMD is also part of a large group of stocks that boast positive ESP. Be sure to use our ESP earnings filter to find out the best stocks to buy or sell before they have reported.

AMD is part of a large group of Computer and Technology stocks that boast positive ESP and investors may want to check out Atlas (SQUAD Free report) also.

Atlassian is a Zacks Rank No. 3 (Hold) and prepares to report earnings on August 4, 2022. TEAM’s most accurate estimate is $ 0.27 per share six days before the next earnings release.

For Atlassian, the percentage difference between its most accurate estimate and its Zacks consensus estimate of $ 0.26 is + 1.92%.

As both stocks hold positive ESP earnings, AMD and TEAM could potentially see earnings beats in their upcoming reports.

Find stocks to buy or sell before they are reported

Use Zacks’ ESP Earnings Filter to get stocks with the highest probability of positive or negative surprise to buy or sell before they are reported for profitable earnings season trading. Find out here >>

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