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Earnings Estimates Moving Higher for Cullen/Frost (CFR): Time to Buy?

Cullen/Frost Bankers (CFR) 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 financial holding 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 -- is principally built on this insight.

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 Cullen/Frost, 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 $2.76 per share for the current quarter represents a change of +79.22% from the number reported a year ago.

The Zacks Consensus Estimate for Cullen/Frost has increased 9.22% over the last 30 days, as five estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

The company is expected to earn $8.60 per share for the full year, which represents a change of +27.22% from the prior-year number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, seven estimates have moved up for Cullen/Frost versus no negative revisions. This has pushed the consensus estimate 6.27% higher.

Favorable Zacks Rank

The promising estimate revisions have helped Cullen/Frost 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 Cullen/Frost because of its solid estimate revisions, as evident from the stock's 14.2% 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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