This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.Īpple is expected to post earnings of $1.18 per share for the current quarter, representing a year-over-year change of -1.7%. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. And if earnings estimates go up for a company, the fair value for its stock goes up. We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock. Here at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
0 kommentar(er)
