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IAA (IAA) Moves 5.9% Higher: Will This Strength Last?

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IAA shares rallied 5.9% in the last trading session to close at $43.05. 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 5.1% gain over the past four weeks.

Shares of IAA jumped yesterday following the amended merger agreement with Ritchie Bros.  The amended agreement seeks to provide IAA’s shareholders with increased cash consideration upon the completion of the transaction. Under the terms of the amended agreement, IAA shareholders will receive $12.80/share in cash (up from $10/share) and 0.5252 Ritchie Bros. share for each IAA share.

This company is expected to post quarterly earnings of $0.53 per share in its upcoming report, which represents a year-over-year change of -13.1%. Revenues are expected to be $511.15 million, down 6.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For IAA, 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 IAA 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 >>>>

IAA is a member of the Zacks Automotive - Domestic industry. One other stock in the same industry, General Motors Company (GM - Free Report) , finished the last trading session 3.1% higher at $36.44. GM has returned 4.5% over the past month.

General Motors Company's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.63. Compared to the company's year-ago EPS, this represents a change of +20.7%. General Motors Company currently boasts a Zacks Rank of #4 (Sell).


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