Brenntag AG (BNTGY) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.
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 -- 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 Brenntag AG, 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 $0.21 per share for the current quarter represents a change of +31.25% from the number reported a year ago.
Over the last 30 days, the Zacks Consensus Estimate for Brenntag AG has increased 21.05% 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 $0.83 per share, representing a year-over-year change of +20.29%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, two estimates have moved up for Brenntag AG versus no negative revisions. This has pushed the consensus estimate 7.1% higher.
Favorable Zacks Rank
The promising estimate revisions have helped Brenntag AG 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.
Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.
While strong estimate revisions for Brenntag AG have attracted decent investments and pushed the stock 8.5% 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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.