Investors might want to bet on Kulicke and Soffa (KLIC), 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 rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this semiconductor equipment maker, 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 Kulicke and Soffa, 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 $1.00 per share for the current quarter represents a change of +1,328.6% from the number reported a year ago.
The Zacks Consensus Estimate for Kulicke and Soffa has increased 39.2% over the last 30 days, as one estimate has gone higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $3.34 per share represents a change of +1,490.5% from the year-ago number.
The revisions trend for the current year also appears quite promising for Kulicke and Soffa, with two 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 28.38%.
Favorable Zacks Rank
The promising estimate revisions have helped Kulicke and Soffa 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
While strong estimate revisions for Kulicke and Soffa have attracted decent investments and pushed the stock 30.7% 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.
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Kulicke and Soffa Industries, Inc. (KLIC): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).