Investors might want to bet on Figs (FIGS), 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 rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this health care apparel company, 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 -- is principally built on this insight.
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 Figs, 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.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $0.06 per share for the current quarter represents a change of +20.0% from the number reported a year ago.
Over the last 30 days, three estimates have moved higher for Figs compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 19.35%.
Current-Year Estimate Revisions
The company is expected to earn $0.36 per share for the full year, which represents a change of +89.5% from the prior-year number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Figs. Over the past month, three estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 11.61%.
Favorable Zacks Rank
The promising estimate revisions have helped Figs earn a Zacks Rank #2 (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.
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 Figs have attracted decent investments and pushed the stock 39.6% 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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