Materion (MTRN - Free Report) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this supplier of engineered materials to technology companies, 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.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Materion, as there has been strong agreement among the covering analysts in raising estimates.
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 $0.70 per share for the current quarter, which represents a year-over-year change of +29.63%.
The Zacks Consensus Estimate for Materion has increased 5.53% over the last 30 days, as two estimates have gone higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $2.77 per share for the full year, which represents a change of +16.39% from the prior-year number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for Materion versus no negative revisions. This has pushed the consensus estimate 10.07% higher.
Favorable Zacks Rank
The promising estimate revisions have helped Materion earn 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.
While strong estimate revisions for Materion have attracted decent investments and pushed the stock 23% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.