Will Advanced Energy (AEIS) Gain on Rising Earnings Estimates?
Investors might want to bet on Advanced Energy Industries (AEIS), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this maker of power-conversion products, should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.
The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.
For Advanced Energy Industries, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The company is expected to earn $1.71 per share for the current quarter, which represents a year-over-year change of +31.5%.
Over the last 30 days, the Zacks Consensus Estimate for Advanced Energy has increased 20.59% because two estimates have moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $6.13 per share, representing a year-over-year change of +65.2%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Advanced Energy. Over the past month, four estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 8.08%.
Favorable Zacks Rank
The promising estimate revisions have helped Advanced Energy earn a Zacks Rank #1 (Strong Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
While strong estimate revisions for Advanced Energy have attracted decent investments and pushed the stock 20.4% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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Advanced Energy Industries, Inc. (AEIS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
