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

Earnings are arguably the most important single number on a company's quarterly financial report. Wall Street clearly dives into all of the other metrics and management's input, but the EPS figure helps cut through all the noise.

We know earnings results are vital, but how a company performs compared to bottom line expectations can be even more important when it comes to stock prices, especially in the near-term. This means that investors might want to take advantage of these earnings surprises.

Hunting for 'earnings whispers' or companies poised to beat their quarterly earnings estimates is a somewhat common practice. But that doesn't make it easy. One way that has been proven to work is by using the Zacks Earnings ESP tool.

The Zacks Earnings ESP, Explained

The Zacks Earnings ESP is more formally known as the Expected Surprise Prediction, and it aims to grab the inside track on the latest analyst estimate revisions ahead of a company's report. The idea is relatively intuitive as a newer projection might be based on more complete information.

Now that we understand the basic idea, let's look at how the Expected Surprise Prediction works. The ESP is calculated by comparing the Most Accurate Estimate to the Zacks Consensus Estimate, with the percentage difference between the two giving us the Zacks ESP figure.

When we join a positive earnings ESP with a Zacks Rank #3 (Hold) or stronger, stocks posted a positive bottom-line surprise 70% of the time. Plus, this system saw investors produce roughly 28% annual returns on average, according to our 10 year backtest.

Most stocks, about 60%, fall into the #3 (Hold) category, and they are expected to perform in-line with the broader market. Stocks with a #2 (Buy) and #1 (Strong Buy) rating, or the top 15% and top 5% of stocks, respectively, should outperform the market, with Strong Buy stocks outperforming more than any other rank.

Should You Consider Monday.com?

Now that we understand what the ESP is and how beneficial it can be, let's dive into a stock that currently fits the bill. Monday.com (MNDY) earns a #3 (Hold) right now and its Most Accurate Estimate sits at $0.72 a share, just six days from its upcoming earnings release on May 12, 2025.

Monday.com's Earnings ESP sits at +2.69%, which, as explained above, is calculated by taking the percentage difference between the $0.72 Most Accurate Estimate and the Zacks Consensus Estimate of $0.70. MNDY is also part of a large group of stocks that boast a positive ESP. Make sure to utilize our Earnings ESP Filter to uncover the best stocks to buy or sell before they've reported.

MNDY is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Confluent (CFLT).

Slated to report earnings on July 30, 2025, Confluent holds a #2 (Buy) ranking on the Zacks Rank, and it's Most Accurate Estimate is $0.08 a share 85 days from its next quarterly update.

For Confluent, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of $0.08 is +1.02%.

Because both stocks hold a positive Earnings ESP, MNDY and CFLT could potentially post earnings beats in their next reports.

Find Stocks to Buy or Sell Before They're Reported

Use the Zacks Earnings ESP Filter to turn up stocks with the highest probability of positively, or negatively, surprising to buy or sell before they're reported for profitable earnings season trading. Check it out here >>

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This article originally published on Zacks Investment Research (zacks.com).

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