Perimeter Solutions, SA (PRM) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
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. Our stock rating tool -- the Zacks Rank -- has this insight at its core.
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.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Perimeter Solutions, SA, as there has been strong agreement among the covering analysts in raising estimates.
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 $0.42 per share for the current quarter represents a change of +7.7% from the number reported a year ago.
Over the last 30 days, one estimate has moved higher for Perimeter Solutions, SA compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 31.25%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $1.91 per share, representing a year-over-year change of +42.5%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Perimeter Solutions, SA. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 30.82%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Perimeter Solutions, SA 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
Investors have been betting on Perimeter Solutions, SA because of its solid estimate revisions, as evident from the stock's 21.4% 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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Perimeter Solutions, SA (PRM): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).