Frontdoor (FTDR) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

Analysts' growing optimism on the earnings prospects of this home services provider is driving estimates higher, 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 Frontdoor, 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 company is expected to earn $0.07 per share for the current quarter, which represents a year-over-year change of -65%.

Over the last 30 days, the Zacks Consensus Estimate for Frontdoor has increased 22.73% because one estimate has moved higher compared to no negative revisions.

Current-Year Estimate Revisions

The company is expected to earn $2.95 per share for the full year, which represents a change of +28.26% from the prior-year number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Frontdoor. Over the past month, two estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 5.56%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Frontdoor currently carries 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.

Bottom Line

While strong estimate revisions for Frontdoor have attracted decent investments and pushed the stock 14.5% 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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