Will Zebra (ZBRA) Gain on Rising Earnings Estimates?
Zebra Technologies (ZBRA) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts' growing optimism on the earnings prospects of this producer of printers for bar codes, plastic cards and, radio-frequency identification tags is driving estimates higher, which 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.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Zebra Technologies, as there has been strong agreement among the covering analysts in raising estimates.
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 $3.75 per share for the current quarter, which represents a year-over-year change of +7.5%.
Over the last 30 days, three estimates have moved higher for Zebra compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 15.96%.
Current-Year Estimate Revisions
The company is expected to earn $15.39 per share for the full year, which represents a change of +13.8% from the prior-year number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, four estimates have moved up for Zebra versus no negative revisions. This has pushed the consensus estimate 5.68% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Zebra currently carries a Zacks Rank #2 (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
Investors have been betting on Zebra because of its solid estimate revisions, as evident from the stock's 5.7% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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Zebra Technologies Corporation (ZBRA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Source Zacks-com
