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

Zacks Investment Research highlights its Earnings ESP (Expected Surprise Prediction) tool, designed to identify stocks likely to beat quarterly earnings estimates by comparing the Most Accurate Estimate to the Zacks Consensus Estimate and incorporating the Zacks Rank. According to a 10-year backtest, combining a Zacks Rank #3 (Hold) or better with a positive Earnings ESP has historically resulted in positive earnings surprises 70% of the time, yielding average annual returns of 28.3%. Micron (MU) and Badger Meter (BMI) are cited as current examples exhibiting positive ESPs, suggesting potential upcoming earnings beats.

Analysis

The provided research highlights the Zacks Earnings ESP (Expected Surprise Prediction) as a quantitative tool for forecasting earnings beats. The methodology hinges on the divergence between the Most Accurate Estimate and the Zacks Consensus Estimate, with a positive ESP indicating a higher likelihood of a positive earnings surprise. According to the article's 10-year backtest, a strategy combining a positive ESP with a Zacks Rank of #3 (Hold) or better has historically yielded a positive surprise 70% of the time, generating average annual returns of 28.3%. Two specific technology sector stocks are presented as current examples: Micron (MU) and Badger Meter (BMI). Both currently hold a Zacks Rank of #3 (Hold). Micron, reporting on June 25, 2025, shows a positive ESP of +6.38%, based on a Most Accurate Estimate of $1.69 versus a consensus of $1.59. Similarly, Badger Meter, reporting on July 18, 2025, has a positive ESP of +6.33%, with its Most Accurate Estimate at $1.26 against a consensus of $1.19. The analysis suggests that, based solely on this proprietary metric, both companies are positioned for a potential upside surprise in their upcoming quarterly reports.

Key Decisions for Investors

• Investors with a focus on event-driven strategies might consider the positive Earnings ESP for Micron (MU) and Badger Meter (BMI) as a potential signal for a short-term tactical trade ahead of their upcoming earnings releases.
• While the positive ESP suggests a potential earnings beat, this should be weighed against both companies' neutral Zacks Rank of #3 (Hold), which implies an expectation of in-line market performance rather than significant outperformance.
• Traders could utilize the specific ESP figures (+6.38% for MU and +6.33% for BMI) as a quantitative input, but should complement this single indicator with broader fundamental analysis and risk management, especially given the binary nature of earnings events.