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Surging Earnings Estimates Signal Upside for Granite Point Mortgage Trust (GPMT) Stock

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Granite Point Mortgage Trust (GPMT - Free Report) 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.

The upward trend in estimate revisions for this real estate investment trust reflects growing optimism of analysts on its earnings prospects, 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.

For Granite Point Mortgage Trust, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates 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 $0.27 per share for the current quarter, which represents a year-over-year change of -20.59%.

Over the last 30 days, one estimate has moved higher for Granite Point Mortgage Trust while one has gone lower. As a result, the Zacks Consensus Estimate has increased 86.67%.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $1.11 per share, representing a year-over-year change of -20.71%.

The revisions trend for the current year also appears quite promising for Granite Point Mortgage Trust, with two estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 16.85%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Granite Point Mortgage Trust 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

While strong estimate revisions for Granite Point Mortgage Trust have attracted decent investments and pushed the stock 21.2% 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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