Research Solutions Inc. could be a solid investment to your portfolio due to its recent upgrade from a Zacks Rank 1 (Strong Buy) This rating change was prompted by an upward trend in earnings estimates, which is one of the most influential forces that affect stock prices.
The company’s earnings outlook is the sole basis for the Zacks Rating. It tracks the consensus estimates of EPS for the current year and the following years by the sell-side analysts who have covered the stock using a consensus measure called the Zacks Consensus estimate.
The Zacks Rating System is extremely useful for individual investors as a way to gauge the impact of changing earnings on stock price movements. It may be difficult for them to make decisions based upon Wall Street analysts’ rating upgrades. These ratings are largely driven by subjective factors that are difficult to measure and see in real-time.
Research Solutions Inc. has been upgraded to a Zacks Rating. This indicates that it is optimistic about its earnings outlook and could lead to buying pressure and a rise in its stock price.
The Most Influencing Force on Stock Prices
Strongly correlated are the changes in a company’s future earnings potential as indicated in earnings estimate revisions and the near-term stock price movements. It’s partly due to institutional investors, who use earnings and estimates to calculate the fair value of shares. Institutional investors often buy or sell stock whose fair value is affected by changes in the earnings estimates used in their valuation models. This results in stock price movement because of the large volumes of shares that they transact.
Research Solutions Inc. believes that rising earnings estimates, and consequent rating upgrades, mean a company’s fundamental business is improving. Investors’ appreciation for this growing business trend should propel the stock higher.
Unlocking the power of earnings Estimate revisions
Empirical research has shown a strong correlation between earnings revision trends and stock movements in the near-term. It could prove to be very rewarding if these revisions can be tracked for investment decisions. The tried-and-true Zacks Rank stock ranking system is a great tool for this purpose, as it harnesses the power earnings estimate revisions.
Zacks Rank’s stock-rating system, which relies on four factors related earnings estimates to group stocks into five categories, ranging Zacks Rank #1 (Strong buy) to Zacks Rank #4 (Strong sell), has a strong externally-audited track-record, with Zacks Rank #1 stocks generating an annual average return of +25% every year since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.
Research Solutions Inc.: Earnings Estimate Revisions
The company expects to earn $0.03 per Share for the fiscal year ending June 2023. This is a 150% increase year-over-year.
Research Solutions Inc. analysts have been increasing their estimates steadily over the past three months. Zacks Consensus estimate for the company has increased 15%.
Contrary to Wall Street analysts who tend to give more weight to favorable recommendations than the Zacks rating, which maintains an equal number of ‘buy’ and’sell ratings for all its stocks, over 4000 at any given time, the Zacks system has a similar ratio of ‘buy’ and’sell’ ratings. Market conditions aside, the Zacks rating system gives a strong buy rating to the top 5% and a strong buy rating to the remaining 15%. The placement of a stock among the top 20% Zacks-covered stocks is a sign of its superior earnings estimation revision feature. This makes it a strong candidate for producing near-term market-beating returns.
You can learn more about the Zacks Rank here >>>
Research Solutions Inc. was upgraded to a Zacks Rank 1. This places it among the top 5% Zacks-covered stocks according to estimate revisions. It is possible that the stock will move higher in near future.
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