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Earnings Estimates Rising for ResMed (RMD): Will It Gain?

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ResMed (RMD) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

The upward trend in estimate revisions for this maker of medical products for respiratory disorders 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. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

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 ResMed, 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.

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

12 Month EPS

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $1.25 per share, which is a change of -6.02% from the year-ago reported number.

Over the last 30 days, one estimate has moved higher for ResMed while one has gone lower. As a result, the Zacks Consensus Estimate has increased 6.65%.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $5.30 per share represents a change of +11.34% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, two estimates have moved up for ResMed versus two negative revisions. This has pushed the consensus estimate 8.94% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, ResMed 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.

Bottom Line

While strong estimate revisions for ResMed have attracted decent investments and pushed the stock 8.8% 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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ResMed Inc. (RMD) : Free Stock Analysis Report

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