OFG Bancorp (OFG - Free Report) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The upward trend in estimate revisions for this financial holding company reflects growing optimism of analysts on its earnings prospects, 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. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
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 OFG, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher 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 $0.41 per share for the current quarter represents a change of +10.81% from the number reported a year ago.
Over the last 30 days, the Zacks Consensus Estimate for OFG has increased 10.81% because one estimate has moved higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $1.50 per share for the full year, which represents a change of +12.78% from the prior-year number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for OFG. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 7.91%.
Favorable Zacks Rank
The promising estimate revisions have helped OFG earn a Zacks Rank #2 (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.
Investors have been betting on OFG because of its solid estimate revisions, as evident from the stock's 7.6% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.