Investors might want to bet on Blackbaud (BLKB - 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.
The upward trend in estimate revisions for this software and services provider in the nonprofit sector 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 Blackbaud, 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 $0.52 per share for the current quarter represents a change of -21.21% from the number reported a year ago.
The Zacks Consensus Estimate for Blackbaud has increased 34.62% over the last 30 days, as one estimate has gone higher while two have gone lower.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $2.06 per share represents a change of -8.04% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Blackbaud. Over the past month, three estimates have moved higher compared to two negative revisions, helping the consensus estimate increase 16.07%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Blackbaud currently carries 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.
While strong estimate revisions for Blackbaud have attracted decent investments and pushed the stock 7.5% 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.