These 2 Computer and Technology Stocks Could Beat Earnings: Why They Should Be on Your Radar

Zacks Research highlights Badger Meter (BMI) and Cloudflare (NET) as computer and technology stocks with a positive Earnings ESP, suggesting a higher probability of exceeding analyst expectations in their upcoming earnings reports; BMI's ESP is +6.33% with an expected release on July 18, 2025, while NET's ESP is +3.98% with an expected release on August 7, 2025. Zacks' backtesting indicates that stocks with a Zacks Rank #3 (Hold) or better and a positive Earnings ESP have historically produced positive surprises 70% of the time, yielding average annual returns of 28.3%.

Analysis

The Zacks Earnings ESP (Expected Surprise Prediction) methodology identifies stocks with a higher likelihood of surpassing earnings expectations, leveraging the most recent analyst revisions. Historical backtesting over a 10-year period indicates that combining a positive Earnings ESP with a Zacks Rank #3 (Hold) or better has resulted in a 70% probability of a positive earnings surprise and generated average annual returns of 28.3%. Currently, Badger Meter (BMI), with an upcoming earnings release on July 18, 2025, exhibits a positive Earnings ESP of +6.33%, as its Most Accurate Estimate of $1.26 per share exceeds the Zacks Consensus Estimate of $1.19. Similarly, Cloudflare (NET), scheduled to report on August 7, 2025, holds a Zacks Rank #3 (Hold) and shows a positive Earnings ESP of +3.98%, with its Most Accurate Estimate at $0.19 per share against a consensus of $0.18. Both BMI and NET, classified under Computer and Technology, are therefore flagged as potentially poised to beat earnings expectations, aligning with the optimistic sentiment surrounding this analytical approach.

Key Decisions for Investors

• Investors may consider monitoring Badger Meter (BMI) and Cloudflare (NET) ahead of their respective Q3 2025 earnings reports, as their positive Earnings ESPs suggest a heightened probability of beating analyst estimates.
• Utilizing the Zacks Earnings ESP filter could be a valuable strategy for identifying other potential earnings surprise candidates, particularly those with a Zacks Rank #3 or better.
• While the positive ESP is a strong historical indicator, investors should note that both BMI and NET currently hold a Zacks Rank #3 (Hold), implying expected in-line market performance, and factor in the distant reporting dates (July/August 2025) when considering any tactical positioning.