Pernod Ricard SA(PRNDY), Upgraded to a Strong Buy: Here’s How
Pernod Ricard SA(PRNDY) is an attractive choice, having been recently upgraded from a Zacks Rank #1 to a Strong Buy. This is a result of an upward trend of earnings estimates, which is one of the most important factors that affect stock prices.
Changes in earnings are the only determinant of a company’s Zacks Rating. The Zacks Consensus estimates are the consensus EPS estimates of the sell-side analysts covering the stock for the current year and the next.
Wall Street analysts often give rating upgrades that can be difficult to understand and assess in real-time. This makes it difficult for individual investors to make informed decisions. The Zacks rating system is useful in these cases because it uses the power of changing earnings to determine near-term stock price movements.
Pernod Ricard SA’s Zacks rating upgrade is therefore a positive comment about its earnings outlook and could have a positive impact on its stock price.
The Most Influencing Force on Stock Prices
A company’s future earnings, as shown in earnings estimate revisions has been strongly correlated to the stock’s near-term price movements. This is partly due to the influence of institutional investors who use earnings and earnings estimations for calculating the fair market value of company shares. A stock’s fair value will change if the earnings estimates are increased or decreased in institutional investors’ valuation models. Typically, institutional investors buy or sell the stock. This results in stock price movements because of the large volumes of shares that they transact.
Fundamentally, Pernod Ricard SA’s rating upgrade and rising earnings estimates imply a better company’s bottom line. Investors should express their appreciation for the improving business trend by pushing stock higher.
The Power of Earnings: Estimate Revisions
Empirical research shows strong correlations between near-term stock movements and revisions in earnings estimates. This could make it a rewarding investment strategy. This is where the proven Zacks Rank stock rating system comes in, since it effectively harnesses earnings estimate revisions.
The Zacks Rank stock rating system uses four factors that are related to earnings estimates to categorize stocks into five groups. Zacks Rank #1 stocks have a remarkable externally-audited record with an average annual return +25% since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.
Pernod Ricard SA: Earnings Estimates Revisions
For the fiscal year ending in June 2023, the company is expected to earn $1.99 a share. This is an 8.2% increase over the reported number for the same year.
Pernod Ricard SA has been steadily increasing the estimates of analysts. The Zacks Consensus estimate for the company has risen 5.7% in the past three month.
Bottom line
The Zacks rating system, unlike Wall Street’s optimistic analysts, does not give favorable recommendations. Instead, it gives equal ‘buy’ and “sell” ratings to its entire stock universe of over 4000 stocks. No matter what market conditions may be, only the top 5 percent of Zacks-covered stocks are given a Strong Buy rating. The next 15 percent receive a Buy rating. A stock’s placement in the top 20 percent of Zacks-covered shares indicates that it has a superior earnings estimate revision capability, which makes it a solid candidate to produce market-beating returns in near term.
You can learn more about the Zacks Rank here >>>
Pernod Ricard SA was upgraded to a Zacks Rank 1. This places the stock among the top 5% Zacks covered stocks according to estimate revisions. It could therefore move higher in future.
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Pernod Ricard SA (PRNDY) : Free Stock Analysis Report