Yahoo Finance Can Silicon Labs (SLAB) Run Higher on Rising Earnings Estimates?
Investors might want to bet on Silicon Laboratories (SLAB), 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 chipmaker, 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 Silicon Labs, 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.
Current-Quarter Estimate Revisions
The earnings estimate of $1.12 per share for the current quarter represents a change of +6.67% from the number reported a year ago.
The Zacks Consensus Estimate for Silicon Labs has increased 82.44% over the last 30 days, as four estimates have gone higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the company is expected to earn $4.95 per share, representing a year-over-year change of +4.43%.
There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, five estimates have moved up for Silicon Labs versus no negative revisions. This has pushed the consensus estimate 36.37% higher.
Favorable Zacks Rank
Thanks to promising estimate revisions, Silicon Labs currently carries 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.
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 Silicon Labs because of its solid estimate revisions, as evident from the stock's 22.3% 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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Silicon Laboratories, Inc. (SLAB) : Free Stock Analysis Report
