Zuora (ZUO) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
The upward trend in estimate revisions for this enterprise software company reflects growing optimism of analysts on its earnings prospects, which 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.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Zuora, as there has been strong agreement among the covering analysts in raising estimates.
Current-Quarter Estimate Revisions
For the current quarter, the company is expected to earn $0.03 per share, which is a change of +200% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for Zuora has increased 6.25% because one estimate has moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $0.15 per share represents a change of +215.38% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Zuora. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 10.94%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Zuora currently carries a Zacks Rank #2 (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.
While strong estimate revisions for Zuora have attracted decent investments and pushed the stock 51.3% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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