Investors might want to bet on PubMatic, Inc. (PUBM), 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 PubMatic, Inc., there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher 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 company is expected to earn $0.17 per share for the current quarter, which represents a year-over-year change of +466.7%.
Over the last 30 days, the Zacks Consensus Estimate for PubMatic has increased 96.82% because one estimate has moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $0.50 per share represents a change of +51.5% from the year-ago number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, one estimate has moved up for PubMatic versus no negative revisions. This has pushed the consensus estimate 65.05% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, PubMatic currently carries 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 PubMatic have attracted decent investments and pushed the stock 32.7% 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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