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

Zacks Investment Research highlights its proprietary Earnings ESP (Expected Surprise Prediction) tool, which identifies companies likely to beat quarterly earnings estimates by comparing the 'Most Accurate Estimate' to the 'Zacks Consensus Estimate.' When combined with a Zacks Rank of #3 (Hold) or stronger, this methodology has historically resulted in positive bottom-line surprises 70% of the time, yielding average annual returns of 28% over a 10-year backtest. The firm points to Leidos (LDOS) and Microchip Technology (MCHP) as current examples of Computer and Technology stocks with positive ESPs and 'Strong Buy' rankings, indicating a high probability of outperforming analyst expectations in their upcoming earnings reports.

Analysis

The analysis highlights a proprietary quantitative strategy, the Zacks Earnings ESP (Expected Surprise Prediction), which has historically identified companies poised for a positive earnings surprise with 70% accuracy when combined with a Zacks Rank of #3 (Hold) or stronger. This methodology's 10-year backtest yielded average annual returns of approximately 28%. The report applies this model to two specific Computer and Technology stocks, Leidos (LDOS) and Microchip Technology (MCHP), both of which currently hold a Zacks Rank #1 (Strong Buy). Leidos, reporting on August 5, 2025, shows an Earnings ESP of +0.65%, with its Most Accurate Estimate of $2.63 per share slightly above the consensus of $2.62. Microchip Technology, reporting on August 7, 2025, displays a more pronounced signal with an ESP of +2.32%, based on a Most Accurate Estimate of $0.24 versus a consensus of $0.23. The combination of a top-tier rank and positive ESP figures suggests both companies have a statistically significant probability of outperforming earnings expectations, which could serve as a positive catalyst for their respective stock prices.

Key Decisions for Investors

• Investors with a short-term, event-driven focus should consider Leidos (LDOS) and Microchip Technology (MCHP) for potential upside, as their positive ESP signals and 'Strong Buy' ranks point to a high probability of a positive earnings surprise in early August.
• While both stocks are favorably positioned, Microchip Technology's significantly higher Earnings ESP of +2.32% compared to Leidos's +0.65% may indicate stronger recent analyst conviction, a factor to consider when prioritizing between the two opportunities.
• Despite the model's strong historical backtest, an earnings beat is a probabilistic outcome, not a guarantee; therefore, appropriate risk management for earnings-related volatility is essential for any position taken based on this signal.