Sprout Social SPT shares soared 14% in the last trading session to close at $7.48. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.2% loss over the past four weeks.
Sprout Social’s rally could continue, fueled by accelerating enterprise customer growth, rapid adoption of its AI-powered Trellis platform, expanding multiyear contracts, improving free cash flow and profitability, and management’s confidence reflected in a $50 million share repurchase program.
This developer of cloud software is expected to post quarterly earnings of $0.16 per share in its upcoming report, which represents a year-over-year change of -11.1%. Revenues are expected to be $122.2 million, up 9.3% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For Sprout Social, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SPT going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Sprout Social is part of the Zacks Internet - Services industry. Tencent Holding Ltd. TCEHY, another stock in the same industry, closed the last trading session 0.2% lower at $53.32. TCEHY has returned -2.2% in the past month.
For Tencent, the consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.12. This represents a change of +19.2% from what the company reported a year ago. Tencent currently has a Zacks Rank of #3 (Hold).
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This article originally published on Zacks Investment Research (zacks.com).