Earnings Estimates Rising for SiTime (SITM): Will It Gain?
Investors might want to bet on SiTime (SITM), 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 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.
For SiTime, 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 $1.14 per share for the current quarter represents a change of +338.5% from the number reported a year ago.
Over the last 30 days, three estimates have moved higher for SiTime compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 223.53%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $5.09 per share, representing a year-over-year change of +59.1%.
The revisions trend for the current year also appears quite promising for SiTime, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 285.29%.
Favorable Zacks Rank
Thanks to promising estimate revisions, SiTime 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.
Bottom Line
Investors have been betting on SiTime because of its solid estimate revisions, as evident from the stock's 21.1% 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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SiTime Corporation (SITM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
