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Elbit (ESLT) Surges 5.9%: Is This an Indication of Further Gains?

Elbit (ESLT) was a big mover last session on higher-than-average trading volume. The latest trend in earnings estimate revisions might not help the stock continue moving higher in the near...

This story originally appeared on Zacks

Elbit Systems (ESLT) shares ended the last trading session 5.9% higher at $157.25. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1% gain over the past four weeks.

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The latest uptick in Elbit Systems’ share performance can be attributed to the company’s announcement of a project to establish power generation and energy storage units at several of its facilities in Israel. In addition, the company will build a 3-megawatt energy generation plant powered by natural gas, an energy storage facility and a management system that will synchronize (on a daily basis) the production activity using various technologies. Considering the growth opportunities of the clean energy market, such an announcement must have boosted confidence of Elbit Systems’ investors and was reflected in the share price appreciation.

This maker of defense electronics is expected to post quarterly earnings of $1.85 per share in its upcoming report, which represents a year-over-year change of +12.8%. Revenues are expected to be $1.27 billion, up 11.7% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Elbit, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ESLT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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