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Elastic (ESTC) Moves 10% Higher: Will This Strength Last?

·2 min read

Elastic (ESTC) shares soared 10% in the last trading session to close at $129.84. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.7% gain over the past four weeks.

The stock recorded this price increase in response to the company’s better-than-expected fourth-quarter fiscal 2021 results. Quarterly loss of 8 cents per share came below the Zacks Consensus Estimate of a loss of 16 cents. Revenues of $177.6 million surpassed the consensus mark by 11.9%.

Price and Consensus

Price Consensus Chart for ESTC
Price Consensus Chart for ESTC

This software developer is expected to post quarterly loss of $0.13 per share in its upcoming report, which represents a year-over-year change of -316.7%. Revenues are expected to be $166.14 million, up 28.9% 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 Elastic, 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 ESTC 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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