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

Zacks highlights its Earnings ESP (Expected Surprise Prediction) tool as a method to identify stocks poised for earnings beats, noting that a positive ESP combined with a Zacks Rank #3 (Hold) or stronger has historically resulted in a 70% success rate for positive surprises and an average 28% annual return over a 10-year period. The article specifically points to BILL Holdings (BILL) and Meta Platforms (META) as current technology stocks exhibiting positive ESPs of +2.94% and +0.53% respectively, suggesting they are candidates for stronger-than-expected quarterly results. This tool offers investors a means to anticipate earnings surprises for potential trading opportunities.

Analysis

The analysis highlights a quantitative strategy for identifying potential earnings beats, centered on the Zacks Earnings Expected Surprise Prediction (ESP) model. This model, which compares the Most Accurate Analyst Estimate to the Zacks Consensus Estimate, has demonstrated a 70% success rate in predicting positive bottom-line surprises when a stock has both a positive ESP and a Zacks Rank of #3 (Hold) or better, a combination that has yielded an average 28% annual return in a 10-year backtest. The report applies this framework to two technology stocks, BILL Holdings (BILL) and Meta Platforms (META). BILL presents a compelling short-term case with an ESP of +2.94%, reflecting its Most Accurate Estimate of $0.42 per share exceeding the consensus of $0.41 just 13 days before its earnings release. Meta Platforms also qualifies with a positive, albeit lower, ESP of +0.53%, derived from a Most Accurate Estimate of $6.73 versus a consensus of $6.69, with its earnings report 76 days out. Both companies currently hold a Zacks Rank #3 (Hold), suggesting a neutral broader market outlook, but the positive ESP signal flags them as candidates for outperformance on their upcoming reporting dates.

Key Decisions for Investors

• Investors seeking catalyst-driven opportunities may consider positions in BILL and META ahead of their earnings reports, leveraging the model's historically high probability of predicting a positive surprise.
• Given its significantly higher ESP of +2.94% and imminent earnings date, BILL represents a more concentrated, near-term tactical play on an earnings beat compared to META's more modest signal and longer timeframe.
• Despite the positive earnings surprise indicator, the neutral Zacks Rank #3 (Hold) for both stocks warrants caution, suggesting investors should weigh the potential for a short-term post-earnings rally against the stocks' broader expectation of in-line market performance.