SunPower (SPWR) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
The upward trend in estimate revisions for this solar products and services company 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 -- 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.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for SunPower, 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
For the current quarter, the company is expected to earn $0.16 per share, which is a change of +328.57% from the year-ago reported number.
The Zacks Consensus Estimate for SunPower has increased 8.86% 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 $0.32 per share for the full year, which represents a change of +357.14% from the prior-year number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for SunPower. Over the past month, four estimates have moved higher compared to one negative revision, helping the consensus estimate increase 30.75%.
Favorable Zacks Rank
Thanks to promising estimate revisions, SunPower 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.
SunPower shares have added 31.2% 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.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
SunPower Corporation (SPWR) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research