Surging Earnings Estimates Signal Upside for Patterson-UTI (PTEN) Stock
Patterson-UTI (PTEN) 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 provider of onshore contract drilling services, 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.
Consensus earnings estimates for the next quarter and full year have moved considerably higher for Patterson-UTI, 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
The company is expected to earn $0.41 per share for the current quarter, which represents a year-over-year change of +207.89%.
Over the last 30 days, four estimates have moved higher for Patterson-UTI compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 12.44%.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $0.64 per share, representing a year-over-year change of +133.16%.
The revisions trend for the current year also appears quite promising for Patterson-UTI, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 10.86%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Patterson-UTI 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 Patterson-UTI have attracted decent investments and pushed the stock 7.3% 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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PattersonUTI Energy, Inc. (PTEN) : Free Stock Analysis Report
