Investors might want to bet on Permian Resources (PR), 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.
Analysts' growing optimism on the earnings prospects of this company is driving estimates higher, 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. This insight is at the core of our stock rating tool -- the Zacks Rank.
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 Permian Resources, 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 company is expected to earn $0.38 per share for the current quarter, which represents a year-over-year change of -9.5%.
The Zacks Consensus Estimate for Permian Resources has increased 10.12% over the last 30 days, as three estimates have gone higher while two have gone lower.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $1.92 per share represents a change of +34.3% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Permian Resources. Over the past month, seven estimates have moved higher compared to two negative revisions, helping the consensus estimate increase 20.49%.
Favorable Zacks Rank
The promising estimate revisions have helped Permian Resources 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 Permian Resources have attracted decent investments and pushed the stock 5.1% 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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Permian Resources Corporation (PR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).