ProPetro Holding (PUMP - Free Report) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this oilfield services company, 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 ProPetro, 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 company is expected to earn $0.59 per share for the current quarter, which represents a year-over-year change of +40.48%.
The Zacks Consensus Estimate for ProPetro has increased 12.27% over the last 30 days, as three estimates have gone higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $2.42 per share for the full year, which represents a change of +21% from the prior-year number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for ProPetro. Over the past month, four estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 9.25%.
Favorable Zacks Rank
The promising estimate revisions have helped ProPetro 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.
ProPetro shares have added 16.7% 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.