SecureWorks (SCWX) Moves 9.2% Higher: Will This Strength Last?

SecureWorks SCWX shares ended the last trading session 9.2% higher at $6.67. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 1.8% gain over the past four weeks.

The growing optimism over the stock can be attributable to the rising demand for its products, given the healthy environment of the global security market. Strong adoption of the company’s cloud-native platform and higher demand for its deep security expertise are helping it win new customers.

This information security services provider is expected to post break-even quarterly earnings per share in its upcoming report, which represents a year-over-year change of +100%. Revenues are expected to be $83.95 million, down 11.1% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For SecureWorks, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on SCWX going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

SecureWorks is part of the Zacks Computers - IT Services industry. Dynatrace DT, another stock in the same industry, closed the last trading session 0.8% higher at $46.42. DT has returned -2.9% in the past month.

Dynatrace's consensus EPS estimate for the upcoming report has changed -0.7% over the past month to $0.27. Compared to the company's year-ago EPS, this represents a change of -12.9%. Dynatrace currently boasts a Zacks Rank of #4 (Sell).

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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.

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