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Surging Earnings Estimates Signal Upside for Arconic (ARNC) Stock

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Arconic 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 upward trend in estimate revisions for this maker of engineered products for the aerospace and other industries 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 Arconic, 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.

Current-Quarter Estimate Revisions

The earnings estimate of $0.51 per share for the current quarter represents a change of +59.38% from the number reported a year ago.

Over the last 30 days, the Zacks Consensus Estimate for Arconic has increased 5.76% because three estimates have moved higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $2.04 per share, representing a year-over-year change of +50%.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Arconic. Over the past month, three estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 8.51%.

Favorable Zacks Rank

The promising estimate revisions have helped Arconic 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.

Bottom Line

Investors have been betting on Arconic because of its solid estimate revisions, as evident from the stock's 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.

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