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MARKETS LIVE BLOG:

STOCKS SLIP WITH MIDEAST TENSIONS, EARNINGS IN PLAY

Oil pares losses as traders anticipate Israel's response to Iranian attack

Earnings Estimates Moving Higher for Ceridian (CDAY): Time to Buy?

Zacks Equity Research
·2 min read

Ceridian HCM (CDAY) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

The upward trend in estimate revisions for this provider of human-resources software and services 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. 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.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Ceridian, as there has been strong agreement among the covering analysts in raising estimates.

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Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $0.12 per share, which is a change of +100% from the year-ago reported number.

The Zacks Consensus Estimate for Ceridian has increased 10.53% over the last 30 days, as three estimates have gone higher while one has gone lower.

Current-Year Estimate Revisions

The company is expected to earn $0.68 per share for the full year, which represents a change of +161.54% from the prior-year number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Ceridian. Over the past month, five estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 68.97%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Ceridian 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 Ceridian because of its solid estimate revisions, as evident from the stock's 25.9% 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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Zacks Investment Research