Yahoo Finance 3 Powerful Examples of the Zacks Rank: ERIE, DUOL, CART
Stocks with rising earnings estimates have significantly outperformed the S&P 500 year after year, whereas stocks with falling earnings estimates have underperformed the S&P 500 year after year.
The Zacks Rank has made the process of identifying stocks with changing earnings estimates easy and very profitable. It’s a reliable tool that helps you trade with confidence regardless of your trading style and/or risk tolerance.
The Zacks Rank uses four factors related to earnings estimates to classify stocks into five groups, ranging from ‘Strong Buy’ to ‘Strong Sell.’ Importantly, it allows individual investors to take advantage of trends in earnings estimate revisions and benefit from the power of institutional investors.
Let’s take a closer look at the Zacks Rank in action across several stocks, including Erie Indemnity ERIE, Duolingo DUOL, and Maplebear Inc. CART.
Erie Keeps Paying Shareholders
Erie Indemnity, a current Zacks Rank #1 (Strong Buy), issues, renews, and underwrites insurance products for personal liability, property, boat, recreational vehicles, home, flood, and auto. The company’s earnings outlook is notably bullish across all timeframes.
Image Source: Zacks Investment Research
Income-focused investors could find ERIE shares attractive, with the company currently sporting a shareholder-friendly 7.4% five-year annualized dividend growth rate paired with a sustainable payout ratio sitting at 50% of its earnings.
Shares got a nice boost following its latest set of quarterly results, with the company posting 40% earnings growth on 18% higher sales. Earnings results have regularly exceeded our expectations, with the company beating the Zacks Consensus EPS estimate by an average of 12% across its last four releases.
Since becoming a Zacks Rank #1 (Strong Buy) on July 30th, shares have gained nearly 15%, widely outperforming.
Image Source: Zacks Investment Research
Duolingo Forecasts Massive Growth
Duolingo, a Zacks Rank #1 (Strong Buy), provides a mobile language learning platform. The company’s forecasted growth is robust, with consensus expectations for its current fiscal year alluding to 430% EPS growth paired with a 40% sales bump.
The company’s growth has already been historically strong, posting double-digit percentage year-over-year sales growth rates in each of its last ten quarters. Below is a chart illustrating DUOL’s sales on a quarterly basis.
Image Source: Zacks Investment Research
And since becoming a Zacks Rank #1 (Strong Buy) on August 9th, shares have gained a rock-solid 15% compared to the S&P 500’s 2% gain. Positive earnings estimate revisions hit the tape following its latest set of quarterly results.
Image Source: Zacks Investment Research
Shares trade at elevated valuation multiples, reflective of investors’ big growth expectations.
Maplebear Disrupts
Maplebear, or Instacart, is the leading grocery technology company in North America that works with grocers and retailers to transform how people shop. Like DUOL, the stock could interest growth-focused investors, with consensus expectations for its current fiscal year suggesting 110% EPS growth on 11% higher sales.
The company’s earnings outlook has brightened across the board, landing into a Zacks Rank #1 (Strong Buy).
Image Source: Zacks Investment Research
Since obtaining the highly-coveted ranking on August 9th, shares have gained more than 10%. Shares really took off following the release of its recent quarterly results that brought positive earnings estimate revisions.
Image Source: Zacks Investment Research
Bottom Line
As the examples above show, listening to the Zacks Rank can consistently result in market-beating gains, as positive earnings estimate revisions provide the fuel needed to move higher in the near term.
All three stocks above – Erie Indemnity ERIE, Duolingo DUOL, and Maplebear Inc. CART – presently sport a Zacks Rank #1 (Strong Buy), reflecting upward trending earnings estimate revisions.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Erie Indemnity Company (ERIE) : Free Stock Analysis Report
Maplebear Inc. (CART) : Free Stock Analysis Report
Duolingo, Inc. (DUOL) : Free Stock Analysis Report
