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Welbilt (WBT) Moves 24.1% Higher: Will This Strength Last?

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Welbilt, Inc. (WBT) shares ended the last trading session 24.1% higher at $24.71. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 10.3% loss over the past four weeks.

Welbilt’s rally is largely driven by Ali Group’s attempt to outbid The Middleby Corporation’s MIDD proposal to acquire it. Notably, in April 2021, Welbilt entered into a merger agreement with Middleby, under which Middleby will acquire the former in an all-stock transaction. However, in the last week, Ali Group made an all-cash offer to acquire Welbilt for $23 a share. Ali Group’s bid seems to have provided Welbilt a chance to reconsider the merger proposal and offer higher values to its shareholders.

Price and Consensus

Price Consensus Chart for WBT
Price Consensus Chart for WBT

This food and beverage equipment maker is expected to post quarterly earnings of $0.10 per share in its upcoming report, which represents a year-over-year change of +242.9%. Revenues are expected to be $333.6 million, up 61.9% 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 Welbilt, the consensus EPS estimate for the quarter has been revised 22% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on WBT going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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