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Surging Earnings Estimates Signal Upside for Magnolia Oil & Gas Corp (MGY) Stock

Magnolia Oil & Gas Corp (MGY) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate r...

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This story originally appeared on Zacks

Magnolia Oil & Gas Corp (MGY) 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.

- Zacks

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this company, 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 Magnolia Oil & Gas Corp, 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.

Current-Quarter Estimate Revisions

The earnings estimate of $0.58 per share for the current quarter represents a change of +866.67% from the number reported a year ago.

The Zacks Consensus Estimate for Magnolia Oil & Gas Corp has increased 23.32% over the last 30 days, as five estimates have gone higher while one has gone lower.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $1.99 per share represents a change of +10050% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, two estimates have moved up for Magnolia Oil & Gas Corp versus no negative revisions. This has pushed the consensus estimate 19.22% higher.

Favorable Zacks Rank

The promising estimate revisions have helped Magnolia Oil & Gas Corp 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

Investors have been betting on Magnolia Oil & Gas Corp because of its solid estimate revisions, as evident from the stock's 7.8% 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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