Back to top

Image: Bigstock

Will Citi Trends (CTRN) Gain on Rising Earnings Estimates?

Read MoreHide Full Article

Citi Trends (CTRN - Free Report) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

Analysts' growing optimism on the earnings prospects of this clothing and accessories company 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 -- has this insight at its core.

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 Citi Trends, 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 $0.32 per share for the current quarter, which represents a year-over-year change of -52.24%.

The Zacks Consensus Estimate for Citi Trends has increased 45.46% over the last 30 days, as one estimate has gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $6.50 per share, representing a year-over-year change of +173.11%.

The revisions trend for the current year also appears quite promising for Citi Trends, with one estimate moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 30%.

Favorable Zacks Rank

The promising estimate revisions have helped Citi Trends 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 Citi Trends have attracted decent investments and pushed the stock 7.6% 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.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Citi Trends, Inc. (CTRN) - free report >>

Published in