Surging Earnings Estimates Signal Upside for Macy's (M) Stock
Macy's (M) shares have started gaining and might continue moving higher in the near term, as indicated by solid earnings estimate revisions.
Macy's (M) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this department store operator, 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 Macy's, 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.
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.25 per share, which is a change of +231.58% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for Macy's has increased 392.36% because five estimates have moved higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $3.73 per share for the full year, which represents a change of +268.78% from the prior-year number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Macy's. Over the past month, seven estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 73.13%.
Favorable Zacks Rank
The promising estimate revisions have helped Macy's 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.
Investors have been betting on Macy's because of its solid estimate revisions, as evident from the stock's 35.2% 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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