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Grid Dynamics (GDYN) Soars 6.9%: Is Further Upside Left in the Stock?

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Grid Dynamics (GDYN) shares rallied 6.9% in the last trading session to close at $15.39. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.6% loss over the past four weeks.

The increase in share price can be attributed to the company’s better-than-expected first quarter 2021 results.

Grid Dynamics reported first quarter non-GAAP earnings of 5 cents per share, which beat the Zacks Consensus Estimate by 66.7%. Revenues of $39.1 million also beat the Zacks Consensus Estimate by 10.7%. Revenues increased 21% on a year-over-year basis and 30% sequentially.

The top line benefited from continued momentum seen in digital transformation by business enterprises owing to the COVID-19 crisis.

Price and Consensus

Price Consensus Chart for GDYN
Price Consensus Chart for GDYN

This company is expected to post quarterly earnings of $0.04 per share in its upcoming report, which represents a year-over-year change of +300%. Revenues are expected to be $36.6 million, up 63.6% 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 Grid Dynamics, 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 GDYN going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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