Will Dell Technologies (DELL) beat estimates again in its next earnings report?

If you’re looking for a stock that has a solid history of beating earnings estimates and is well-positioned to continue the trend in its next quarterly report, you should consider Dell Technologies (DELL). This company, operating in the Zacks Computers – IT Services industry, shows potential for another earnings beat.

Looking at the last two reports, this computer and technology services provider has had a strong streak of beating earnings estimates. Over the last two quarters, the company has exceeded estimates by an average of 5.49%.

For the most recently reported quarter, Dell Technologies posted earnings of $2.37 per share versus the Zacks Consensus Estimate of $2.33 per share, representing a surprise of 1.72%. For the prior quarter, the company was expected to post earnings of $2.05 per share and it actually produced earnings of $2.24 per share, delivering a surprise of 9.27%.

Price and EPS surprise

For Dell Technologies, estimates are trending upwards, thanks in part to its history of surprising results. And if you look at the positive Zacks Earnings ESP (Expected Surprise Estimate), it is a great indicator of future earnings growth, especially when combined with the solid Zacks Rank.

Our research shows that stocks with the combination of a positive Earnings ESP and a Zacks Rank #3 (Hold) or better produce a positive surprise nearly 70% of the time. In other words, if you have 10 stocks in this combination, the number of stocks that beat the consensus could be as high as seven.

The Zacks Earnings ESP compares the Most Accurate Estimates to the Zacks Consensus Estimates for the quarter; The Most Accurate Estimate is the Zacks Consensus version, which is defined in terms of change. The idea is that analysts reviewing their estimates just before an earnings release have the latest information, which could potentially be more accurate than what they and other consensus participants had previously predicted.

Currently, Dell Technologies’ earnings ESP is +4.88%, which suggests that analysts have recently become optimistic about the company’s earnings prospects. This positive Earnings ESP combined with the stock’s Zacks Rank #3 (Hold) indicates that another rally is likely just around the corner. We expect the company’s next earnings report to be published on February 24, 2022.

However, investors should remember that a negative earnings ESP reading does not mean a loss of earnings, but a negative value reduces the predictive power of the metric.

Many companies end up beating consensus EPS estimates, but that may not be the only basis for their stock’s rise. On the other hand, some stocks may hold even if they fall short of the consensus price.

For this reason, it is very important to check a company’s earnings ESP before its quarterly release to increase the chances of success. Use our Earnings ESP filter to find the best stocks to buy or sell before they report.

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