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Strength Seen in Sonos (SONO): Can Its 14.1% Jump Turn into More Strength?

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Sonos (SONO - Free Report) shares rallied 14.1% in the last trading session to close at $30.20. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 3% loss over the past four weeks.

Sonos' shares have rallied in response to news that Standard & Poor's is adding the stock to its S&P Small Cap 600 Index, replacing Chart Industries. This change will be effective prior to the opening of trading on March 30, 2022. This announcement was made by S&P Dow Jones Indices after last Friday's close.

Sonos is benefiting from robust demand for its products in the growing global audio market. The company's focus on its three strategic initiatives — expanding its brand, boosting its offerings and driving operational excellence, also positions it well. The company is likely to have also gained from its proprietary software that serves as the backbone of Sonos sound system.

This maker of wireless speakers and home sound systems is expected to post quarterly earnings of $0.04 per share in its upcoming report, which represents a year-over-year change of -87.1%. Revenues are expected to be $361.4 million, up 8.6% 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 Sonos, 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 SONO 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 >>>>

Sonos belongs to the Zacks Audio Video Production industry. Another stock from the same industry, Dolby Laboratories (DLB - Free Report) , closed the last trading session 1.5% higher at $77.88. Over the past month, DLB has returned 1.1%.

For Dolby Laboratories, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $0.80. This represents a change of -12.1% from what the company reported a year ago. Dolby Laboratories currently has a Zacks Rank of #3 (Hold).

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