Investors might want to bet on Diamondback Energy (FANG Quick QuoteFANG - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

Analysts' growing optimism on the earnings prospects of this energy exploration and production 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. This insight is at the core of our stock rating tool -- the Zacks Rank.

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 Diamondback Energy, 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 earnings estimate of $5.15 per share for the current quarter represents a change of +92.9% from the number reported a year ago.

The Zacks Consensus Estimate for Diamondback has increased 19.85% over the last 30 days, as three estimates have gone higher while three have gone lower.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $18.84 per share represents a change of +40.9% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, seven estimates have moved up for Diamondback versus four negative revisions. This has pushed the consensus estimate 27.61% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, Diamondback currently carries 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

Diamondback shares have added 5.5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.