Commvault Systems (CVLT) appears an attractive pick given a noticeable improvement in the company’s earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.
Analysts’ growing optimism on the earnings prospects of this data-management software company is driving estimates higher, 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. This insight is at the core of our stock rating tool — the Zacks Rank.
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.
For Commvault, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.
The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:
12 Month EPS
Current-Quarter Estimate Revisions
The earnings estimate of $0.75 per share for the current quarter represents a change of +4.17% from the number reported a year ago.
The Zacks Consensus Estimate for Commvault has increased 5.93% over the last 30 days, as one estimate has gone higher compared to no negative revisions.
Current-Year Estimate Revisions
For the full year, the earnings estimate of $3.38 per share represents a change of +13.42% from the year-ago number.
In terms of estimate revisions, the trend for the current year also appears quite encouraging for Commvault. Over the past month, three estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 18.88%.
Favorable Zacks Rank
Thanks to promising estimate revisions, Commvault 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
While strong estimate revisions for Commvault have attracted decent investments and pushed the stock 7.2% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.
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CommVault Systems, Inc. (CVLT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
