Want Better Returns? Don’t Ignore These 2 Computer and Technology Stocks Set to Beat Earnings

Two factors often determine stock prices in the long run: earnings and interest rates. Investors can’t control the latter, but they can focus on a company’s earnings results every quarter.

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.

The Zacks Earnings ESP, or Expected Surprise Prediction, aims to find earnings surprises by focusing on the most recent analyst revisions. The basic premise is that if an analyst reevaluates their earnings estimate ahead of an earnings release, it means they likely have new information that could possibly be more accurate. The core of the ESP model is comparing the Most Accurate Estimate to the Zacks Consensus Estimate, where the resulting percentage difference between the two equals the Expected Surprise Prediction.

The final step today is to look at a stock that meets our ESP qualifications. Paypal (PYPL) earns a Zacks Rank #3 29 days from its next quarterly earnings release on February 5, 2025, and its Most Accurate Estimate comes in at $1.13 a share.

Paypal’s Earnings ESP sits at 2.15%, which, as explained above, is calculated by taking the percentage difference between the $1.13 Most Accurate Estimate and the Zacks Consensus Estimate of $1.11.

PYPL is one of just a large database of Computer and Technology stocks with positive ESPs. Another solid-looking stock is Datadog (DDOG).

Datadog is a Zacks Rank #2 (Buy) stock, and is getting ready to report earnings on February 11, 2025. DDOG’s Most Accurate Estimate sits at $0.43 a share 35 days from its next earnings release.

The Zacks Consensus Estimate for Datadog is $0.43, and when you take the percentage difference between that number and its Most Accurate Estimate, you get the Earnings ESP figure of 0.36%.

PYPL and DDOG’s positive ESP metrics may signal that a positive earnings surprise for both stocks is on the horizon.

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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PayPal Holdings, Inc. (PYPL) : Free Stock Analysis Report

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