Surging Earnings Estimates Signal Upside for StoneCo Ltd. (STNE) Stock
Investors might want to bet on StoneCo Ltd. (STNE), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.
The upward trend in estimate revisions for this 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 -- 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 StoneCo Ltd. Strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.
Current-Quarter Estimate Revisions
The company is expected to earn $0.26 per share for the current quarter, which represents a year-over-year change of +85.71%.
Over the last 30 days, one estimate has moved higher for StoneCo Ltd. compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 12.06%.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $0.85 per share represents a change of +157.58% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for StoneCo Ltd. Over the past month, three estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 7.91%.
Favorable Zacks Rank
The promising estimate revisions have helped StoneCo Ltd. earn 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
StoneCo Ltd. shares have added 23.8% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.
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StoneCo Ltd. (STNE) : Free Stock Analysis Report
