Can LSI (LYTS) Run Higher on Rising Earnings Estimates?
LSI (LYTS) 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 lighting and LED display 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. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.
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 LSI, as there has been strong agreement among the covering analysts in raising estimates.
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 $0.18 per share, which is a change of +20% from the year-ago reported number.
Over the last 30 days, one estimate has moved higher for LSI compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 50%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $0.76 per share, representing a year-over-year change of +18.75%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for LSI. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 10.15%.
Favorable Zacks Rank
Thanks to promising estimate revisions, LSI 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 LSI have attracted decent investments and pushed the stock 27.7% 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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