Why Investors Need to Take Advantage of These 2 Computer and Technology Stocks Now

Zacks highlights its proprietary Earnings ESP (Expected Surprise Prediction) model, designed to identify stocks likely to report positive earnings surprises by comparing the 'Most Accurate Estimate' to the 'Zacks Consensus Estimate' and factoring in the Zacks Rank. Backtesting over 10 years indicates that stocks with a Zacks Rank #3 or better and a positive Earnings ESP delivered a positive surprise 70% of the time, yielding an average annual return of 28.3%. Garmin (GRMN) and Affirm Holdings (AFRM) are presented as current examples with positive ESPs, suggesting potential for upcoming positive earnings surprises.

Analysis

The analysis centers on the Zacks Earnings ESP (Expected Surprise Prediction) model, a quantitative tool designed to forecast earnings surprises by tracking recent analyst revisions. The model's historical performance, based on a 10-year backtest, indicates that stocks with a positive ESP and a Zacks Rank of #3 (Hold) or better post a positive earnings surprise 70% of the time, generating an average annual return of 28.3%. Garmin (GRMN) is highlighted as a prime example, holding a Zacks Rank #2 (Buy) and a significant positive ESP of +5.56%, derived from its Most Accurate Estimate of $2.09 versus a consensus of $1.98 ahead of its October 29, 2025 report. Affirm Holdings (AFRM) is also presented as a candidate, though with a less pronounced signal; it carries a Zacks Rank #3 (Hold) and a positive ESP of +2.30%, based on its Most Accurate Estimate of $0.11 against a consensus of $0.10. The core thesis is that these positive ESP metrics suggest a heightened probability of both companies exceeding their respective consensus earnings estimates in their upcoming reports, with Garmin presenting a stronger bullish signal according to the model's parameters.

Key Decisions for Investors

• Investors could consider utilizing the Earnings ESP metric as a quantitative screen to identify potential short-term, catalyst-driven trading opportunities ahead of earnings announcements, given the model's reported historical efficacy.
• Garmin (GRMN) presents a compelling setup for a potential earnings beat, with its #2 (Buy) rank and a strong +5.56% ESP, warranting consideration for investors positioning for upside volatility around its upcoming earnings date.
• While Affirm Holdings (AFRM) also has a positive ESP, its neutral #3 (Hold) rating suggests a more cautious approach, as the signal is less potent than Garmin's and implies an in-line market performance.
• It is crucial to recognize that this model is a probabilistic indicator based on historical data; any pre-earnings strategy should be accompanied by robust risk management to mitigate the inherent volatility of earnings season.