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How to Find Strong Computer and Technology Stocks Slated for Positive Earnings Surprises

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.

The earnings figure itself is key, but a beat or miss on the bottom line can sometimes be just as, if not more, important. Therefore, investors should consider paying close attention to these earnings surprises, as a big beat can help a stock climb even higher.

2 Stocks to Add to Your Watchlist

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. 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.

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The final step today is to look at a stock that meets our ESP qualifications. Microsoft (MSFT) earns a Zacks Rank #3 15 days from its next quarterly earnings release on January 24, 2023, and its Most Accurate Estimate comes in at $2.32 a share.

Microsoft's Earnings ESP sits at 1.51%, which, as explained above, is calculated by taking the percentage difference between the $2.32 Most Accurate Estimate and the Zacks Consensus Estimate of $2.29.

MSFT is just one of a large group of Computer and Technology stocks with a positive ESP figure. SentinelOne (S) is another qualifying stock you may want to consider.

Slated to report earnings on March 21, 2023, SentinelOne holds a #3 (Hold) ranking on the Zacks Rank, and it's Most Accurate Estimate is -$0.16 a share 71 days from its next quarterly update.

For SentinelOne, the percentage difference between its Most Accurate Estimate and its Zacks Consensus Estimate of -$0.16 is 0.18%.

MSFT and S' positive ESP figures tell us that both stocks have a good chance at beating analyst expectations in their next earnings report.

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 >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Microsoft Corporation (MSFT) : Free Stock Analysis Report

SentinelOne, Inc. (S) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research