HCI Group (HCI) 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.
The upward trend in estimate revisions for this property and casualty insurance holding 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. 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 HCI Group, 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 earnings estimate of $4.49 per share for the current quarter represents a change of +23.01% from the number reported a year ago.
Over the last 30 days, the Zacks Consensus Estimate for HCI Group has increased 11.41% because two estimates have moved higher while one has gone lower.
The company is expected to earn $14.98 per share for the full year, which represents a change of +102.16% from the prior-year number.
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 HCI Group versus no negative revisions. This has pushed the consensus estimate 10.99% higher.
The promising estimate revisions have helped HCI Group earn 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.
While strong estimate revisions for HCI Group have attracted decent investments and pushed the stock 14.9% 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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HCI Group, Inc. (HCI) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
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