![]() ![]() It's almost impossible for a company to grow its earnings without growing its revenue for long periods. The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:Įven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #3 (Hold) for Lumen. With an impressive externally audited track record, our proprietary stock rating tool - the Zacks Rank - is a more conclusive indicator of a stock's near-term price performance, as it effectively harnesses the power of earnings estimate revisions. Over the past month, the estimate has changed -2.4%. Over the last 30 days, this estimate has changed -13.8%.įor the next fiscal year, the consensus earnings estimate of $0.81 indicates a change of -39.6% from what Lumen is expected to report a year ago. The Zacks Consensus Estimate has changed -16.6% over the last 30 days.įor the current fiscal year, the consensus earnings estimate of $1.34 points to a change of -29.8% from the prior year. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.įor the current quarter, Lumen is expected to post earnings of $0.18 per share, indicating a change of -64.7% from the year-ago quarter. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. And if earnings estimates go up for a company, the fair value for its stock goes up. We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings. Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. ![]()
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