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

The Zacks Earnings ESP (Expected Surprise Prediction) methodology, which identifies potential earnings beats by comparing the most accurate analyst estimate to the consensus and factoring in the Zacks Rank, has historically predicted positive earnings surprises 70% of the time for stocks with a positive ESP and a Zacks Rank of #3 or better, delivering average annual returns of 28.3% over a decade. Based on this, Western Digital (WDC) with a +3.02% ESP and Seagate (STX) with a +4.59% ESP, both currently holding a Zacks #3 Rank, are presented as computer and technology stocks poised for potential earnings beats in their upcoming reports.

Analysis

The analysis centers on the Zacks Earnings ESP (Expected Surprise Prediction) model, a quantitative tool designed to forecast earnings beats by identifying positive momentum in analyst estimate revisions. The model's historical efficacy is notable, with a reported 70% success rate in predicting positive surprises and generating 28.3% average annual returns in a 10-year backtest for stocks with a positive ESP and a Zacks Rank of #3 (Hold) or better. Two specific technology sector companies, Western Digital (WDC) and Seagate (STX), are highlighted as current examples. WDC holds a positive ESP of +3.02%, based on its Most Accurate Estimate of $1.62 per share versus a consensus of $1.57 for its October 23, 2025 earnings. Seagate exhibits a stronger signal with a +4.59% ESP, reflecting a Most Accurate Estimate of $2.45 against a $2.34 consensus ahead of its October 28, 2025 report. While these metrics point to a statistical likelihood of both firms exceeding earnings expectations, this potential catalyst is tempered by their neutral Zacks Rank of #3 (Hold), which implies an underlying expectation of in-line market performance rather than significant outperformance.

Key Decisions for Investors

• Investors with an appetite for event-driven strategies could consider tactical positioning in WDC and STX leading into their late October 2025 earnings reports to potentially capitalize on a positive surprise.
• It is crucial to weigh the potential for an earnings beat against the neutral Zacks #3 (Hold) rating, which suggests any resulting upside in the stock price may be moderate rather than substantial.
• Portfolio managers should consider using analyst estimate momentum, such as the ESP metric, as a quantitative screening tool to identify other potential short-term trading opportunities ahead of earnings season.
• Given both firms are in the same industry and flagged by the same metric, investors could consider a pair trade or evaluate sector-wide sentiment driving these estimate revisions.