Investors might find ServisFirst Bancshares (SFBS) a promising bet, given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade reflects a positive trend in earnings estimates, a significant factor influencing stock prices.
Zacks Ratings focus on a company’s evolving earnings picture, tracking EPS estimates for the current and upcoming years from sell-side analysts. This consensus measure, known as the Zacks Consensus Estimate, plays a crucial role in the rating system.
For individual investors, the Zacks rating system is valuable as it emphasizes a company’s changing earnings outlook, a critical factor impacting ServisFirst stock prices. Unlike Wall Street analyst ratings driven by subjective factors, Zacks’ approach provides a data-driven and real-time assessment.
The Zacks upgrade for ServisFirst serves as a positive endorsement of its earnings outlook, potentially influencing its stock price favorably. Earnings estimate revisions have a powerful impact on stock prices, as institutional investors use them to calculate fair value, influencing their buying or selling decisions.
Rising earnings estimates and the resulting rating upgrade for ServisFirst indicate an improvement in its underlying business, encouraging investors to show their approval by driving the stock higher.
Harnessing the strength of earnings estimate revisions is crucial for making informed investment decisions. The Zacks Rank stock-rating system, utilizing four factors related to earnings estimates, classifies stocks into five groups. With an impressive track record, Zacks Rank #1 (Strong Buy) stocks have generated an average annual return of +25% since 1988.
For ServisFirst, analysts project earnings of $3.90 per share for the fiscal year ending December 2023, signifying a change of -15.4% from the previous year. Notably, analysts have consistently raised their estimates for the company over the past three months, indicating positive momentum.
In contrast to Wall Street analyst ratings, which can be overly optimistic, the Zacks rating system maintains an equal proportion of ‘buy’ and ‘sell’ ratings for its entire stock universe. Only the top 5% receive a ‘Strong Buy,’ and the next 15% get a ‘Buy’ rating, placing ServisFirst in the top 20% of Zacks-covered stocks. This positioning underscores its superior earnings estimate revision feature, making it a solid candidate for potential market-beating returns in the near term.
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