AppLovin (APP) 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 mobile app technology company 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. This insight is at the core of our stock rating tool -- the Zacks Rank.
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 AppLovin, 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.
The company is expected to earn $1.45 per share for the current quarter, which represents a year-over-year change of +116.42%.
The Zacks Consensus Estimate for AppLovin has increased 10.15% over the last 30 days, as five estimates have gone higher while one has gone lower.
For the full year, the company is expected to earn $6.64 per share, representing a year-over-year change of +46.58%.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for AppLovin. Over the past month, five estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 8.56%.
Thanks to promising estimate revisions, AppLovin 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.
AppLovin shares have added 49% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.
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