CrossAmerica Partners (CAPL) 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 rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this wholesale fuels distributor, 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 CrossAmerica Partners, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher 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
For the current quarter, the company is expected to earn $0.38 per share, which is a change of +442.9% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for CrossAmerica has increased 80.95% because one estimate has moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $1.06 per share represents a change of +3.9% from the year-ago number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for CrossAmerica versus no negative revisions. This has pushed the consensus estimate 116.28% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, CrossAmerica currently carries 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
CrossAmerica shares have added 7.1% 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.
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CrossAmerica Partners LP (CAPL): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).