Will Silicon Labs (SLAB) Gain on Rising Earnings Estimates?
Silicon Laboratories (SLAB) 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 chipmaker, 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 Silicon Labs, 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.
Current-Quarter Estimate Revisions
The earnings estimate of $1.02 per share for the current quarter represents a change of +200% from the number reported a year ago.
Over the last 30 days, the Zacks Consensus Estimate for Silicon Labs has increased 77.78% because three estimates have moved higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $4.18 per share for the full year, which represents a change of +90% from the prior-year number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, four estimates have moved up for Silicon Labs versus no negative revisions. This has pushed the consensus estimate 16.35% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Silicon Labs 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 Silicon Labs have attracted decent investments and pushed the stock 25.8% 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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