Bellring Brands (BRBR) could be a solid pick for investors given its recent upgrade to a Zacks Rank #2 (Buy). The upward trend in earnings expectations, one of the most powerful factors influencing stock prices, led to this rating change.
The only factor determining the Zacks Rating is the change in a company's earnings profile. The system tracks the Zacks Consensus Estimate (the consensus of EPS estimates from the sell-side analysts covering the stock) for the current and next year.
The Zacks rating system is very useful to individual investors because changes in earnings status are a powerful factor influencing short-term stock price movements. Upgrades by Wall Street analysts are driven primarily by subjective factors that are difficult to see or measure in real time, so you may find it difficult to make decisions based on these.
Therefore, Zacks' rating upgrade for Bellring Brands essentially reflects positivity about the company's earnings outlook, which could lead to buying pressure and an increase in its stock price.
The most powerful force affecting stock prices
The change in a company's future earnings potential, as reflected in earnings estimate revisions, has proven to be highly correlated with near-term stock price movements. Part of the reason is due to the influence of institutional investors, who use earnings and profit estimates to calculate the fair value of a company's stock. An increase or decrease in earnings expectations in a valuation model simply results in an increase or decrease in the fair value of a stock, and institutional investors typically buy or sell the stock. Their large-scale investment actions lead to fluctuations in stock prices.
For BellRing Brands, higher earnings estimates and the accompanying rating upgrade essentially mean improvement in the company's fundamental business. Investors should appreciate this improving economic trend and push up stock prices.
Harnessing the power of earnings forecast revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements, so being able to track such revisions for making investment decisions can be extremely useful. There is a possibility that it will be. This is where the proven Zacks Rank stock rating system comes in, which harnesses the power of earnings estimate revisions effectively.
The Zacks Rank stock rating system uses four factors related to earnings expectations to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell). Masu. This system has an excellent track record with external audits. Zacks #1 Rank stocks have generated an average annual return of +25% since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.
Regarding the revision of the performance forecast for the Bell Ring brand
The nutritional supplement company is expected to report earnings of $1.66 per share for the fiscal year ending September 2024, representing a 25.8% change from the prior year.
Analysts have been steadily raising their expectations for Bell Ring Brands. Over the past three months, the company's Zacks Consensus Estimate has increased 6.5%.
conclusion
Unlike the overly optimistic Wall Street analyst rating system, which tends to weight favorable recommendations, the Zacks rating system consistently issues an equal percentage of buys to its entire universe of over 4,000 stocks. The company maintains its “sell” rating. Regardless of market conditions, only the top 5% of stocks covered by Zacks earn a “Strong Buy” rating, and the next 15% of his stocks earn a “Buy” rating. Therefore, a stock's inclusion in the top 20% of stocks covered by Zacks indicates that Zacks has a strong earnings estimate revision capability, making it a strong candidate to outperform the market in the short term. It becomes.
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Bellring Brands' upgrade to a Zacks Rank #2 puts the company in the top 20% of Zacks-covered stocks in terms of estimate revisions, suggesting potential for near-term stock price appreciation. are doing.
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BellRing Brands Inc. (BRBR): Free Stock Analysis Report
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