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Strength Seen in Vaalco Energy (EGY): Can Its 8.6% Jump Turn into More Strength?

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Vaalco Energy (EGY) shares rallied 8.6% in the last trading session to close at $5.53. 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 47.5% gain over the past four weeks.

VAALCO Energy extended its rally for the fourth straight day, driven by optimism over crude prices spurred by a supportive macro backdrop, geopolitical tensions and the OPEC+ supply curtailments. The steady increase in commodity prices to around $90 a barrel has pushed drilling activity higher and contributed to the strength in VAALCO Energy, whose productive capacity is based offshore West Africa. The company’s shares have also been buoyed by the recent dividend initiation.

This oil and natural gas explorer is expected to post quarterly earnings of $0.24 per share in its upcoming report, which represents a year-over-year change of +340%. Revenues are expected to be $48.9 million, up 289.3% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Vaalco Energy, 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 EGY 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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