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Earnings Estimates Rising for NortonLifeLock (NLOK): Will It Gain?

NortonLifeLock (NLOK) 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 rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this security software maker, 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 NortonLifeLock, 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.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.19 per share for the current quarter, which represents a year-over-year change of -51.28%.

The Zacks Consensus Estimate for NortonLifeLock has increased 324.75% over the last 30 days, as five estimates have gone higher while two have gone lower.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $1.05 per share represents a change of -33.96% from the year-ago number.

The revisions trend for the current year also appears quite promising for NortonLifeLock, with seven estimates moving higher over the past month compared to one negative revision. The consensus estimate has also received a boost over this time frame, increasing 93.55%.

Favorable Zacks Rank

Thanks to promising estimate revisions, NortonLifeLock currently carries 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

While strong estimate revisions for NortonLifeLock have attracted decent investments and pushed the stock 16.2% 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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