Why ArcBest (ARCB) Might be Well Poised for a Surge
Zacks Investment Research | Oct 05, 2021 12:20AM ET
ArcBest (NASDAQ:ARCB) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.
The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this freight transportation and logistics 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 ArcBest, 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
For the current quarter, the company is expected to earn $2.20 per share, which is a change of +80.33% from the year-ago reported number.
Over the last 30 days, the Zacks Consensus Estimate for ArcBest has increased 6.74% because three estimates have moved higher compared to no negative revisions.
Current-Year Estimate Revisions
The company is expected to earn $6.61 per share for the full year, which represents a change of +104.64% from the prior-year number.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, three estimates have moved up for ArcBest versus no negative revisions. This has pushed the consensus estimate 5.35% higher.
Favorable Zacks Rank
The promising estimate revisions have helped ArcBest earn 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 .
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
ArcBest shares have added 21.5% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.
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