Surging Earnings Estimates Signal Upside for Xperi (XPER) Stock
Zacks Investment Research | Dec 08, 2021 12:20AM ET
Investors might want to bet on Xperi (NASDAQ:XPER), 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 provider of chip technology for small electronic devices, 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 Xperi, 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
For the current quarter, the company is expected to earn $0.45 per share, which is a change of -79.07% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for Xperi has increased 18.42% because one estimate has moved higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $2.18 per share, representing a year-over-year change of -40.6%.
The revisions trend for the current year also appears quite promising for Xperi, with one estimate moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 7.39%.
Favorable Zacks Rank
The promising estimate revisions have helped Xperi 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. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Get The News You Want
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
Bottom Line
Investors have been betting on Xperi because of its solid estimate revisions, as evident from the stock's 7% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.
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