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Falcon Minerals (FLMN) Surges 6.8%: Is This an Indication of Further Gains?

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Falcon Minerals shares soared 6.8% in the last trading session to close at $5.02. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 5.2% gain over the past four weeks.

Increased optimism over the accelerated recovery in the energy sector following the massive oil price improvement primarily drove the stock. Falcon Minerals is well-positioned to capitalize on the rapidly improving oil price with mineral, royalty and over-riding royalty interests in prolific Eagle Ford shale play. The company has a conservative balance sheet with low exposure to debt capital. Thus, the company will rely on its balance sheet to sail through the uncertainty in the energy business induced by the coronavirus pandemic.

This company is expected to post quarterly earnings of $0.08 per share in its upcoming report, which represents a year-over-year change of +700%. Revenues are expected to be $21.5 million, up 122.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Falcon Minerals, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on FLMN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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