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

Zacks is promoting its Earnings ESP (Expected Surprise Prediction) system, which combines the 'Most Accurate Estimate' with the Zacks Consensus Estimate and a Zacks Rank of #3 (Hold) or stronger to forecast earnings surprises. This methodology has historically predicted positive bottom-line surprises 70% of the time, generating average annual returns of 28% over a 10-year backtest. Seagate (STX) and SAP (SAP) are highlighted as current examples, both holding a Zacks Rank #3 and exhibiting positive ESPs of +4.59% and +4.12% respectively, suggesting potential for upcoming earnings beats.

Analysis

Seagate (STX) and SAP (SAP) have been identified as having a heightened probability of delivering positive earnings surprises in their upcoming quarterly reports, based on the Zacks Expected Surprise Prediction (ESP) model. This bullish short-term indicator is derived from recent upward analyst estimate revisions, which are often a precursor to an earnings beat. Specifically, Seagate's Most Accurate Estimate of $2.45 per share creates a positive Earnings ESP of +4.59% against the consensus of $2.34. Similarly, SAP's Most Accurate Estimate of $1.77 yields a +4.12% ESP over its $1.70 consensus. While both companies currently hold a Zacks Rank of #3 (Hold), indicating an expectation of in-line market performance, the model's historical data suggests that stocks with a positive ESP and a rank of #3 or better have posted a positive bottom-line surprise 70% of the time. This specific quantitative signal points to a potential near-term catalyst for both stocks around their late-October 2025 earnings dates, distinct from their broader market outlook.

Key Decisions for Investors

• Investors focused on short-term, catalyst-driven strategies could consider tactical long positions in STX and SAP ahead of their respective earnings reports in late October to capitalize on a potential post-announcement price appreciation.
• It is crucial to weigh the positive ESP signal against the neutral #3 (Hold) rank for both stocks, which implies that a significant earnings beat may be required to drive meaningful outperformance and that a failure to surprise positively is a key risk.
• Traders should monitor the Earnings ESP for both STX and SAP for any degradation in the metric leading up to their reporting dates, as a negative revision would invalidate the current positive earnings surprise thesis.