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Strength Seen in Compass (CMP): Can Its 13.3% Jump Turn into More Strength?

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Compass Minerals (CMP - Free Report) shares soared 13.3% in the last trading session to close at $15.51. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 39% loss over the past four weeks.

The surge in Compass Minerals' stock price can be attributed to the completion of an amendment to its credit agreement, which provides temporary financial covenant relief amidst challenges posed by a mild deicing season and decreased plant nutrition earnings. This adjustment offers flexibility in the near term, aligning with the company's strategy to fortify its balance sheet and boost returns on capital, instilling confidence among investors regarding its resilience and strategic direction.

This minerals producer is expected to post quarterly earnings of $0.36 per share in its upcoming report, which represents a year-over-year change of +178.3%. Revenues are expected to be $420.73 million, up 2.3% 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 Compass, 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 CMP 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 >>>>

Compass is a member of the Zacks Chemical - Diversified industry. One other stock in the same industry, Cabot (CBT - Free Report) , finished the last trading session 2.6% higher at $91.85. CBT has returned 7.3% over the past month.

Cabot's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.66. Compared to the company's year-ago EPS, this represents a change of +24.8%. Cabot currently boasts a Zacks Rank of #3 (Hold).

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