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Earnings Estimates Moving Higher for Sally Beauty (SBH): Time to Buy?

Investors might want to bet on Sally Beauty (SBH), as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this beauty products seller, 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. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

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 Sally Beauty, strong agreement among the covering analysts in revising earnings estimates upward has resulted in meaningful improvement in consensus estimates for the next quarter and full year.

Current-Quarter Estimate Revisions

The earnings estimate of $0.61 per share for the current quarter represents a change of +22% from the number reported a year ago.

The Zacks Consensus Estimate for Sally Beauty has increased 16.56% over the last 30 days, as two estimates have gone higher while one has gone lower.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $2.55 per share represents a change of +6.25% from the year-ago number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Sally Beauty. Over the past month, four estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 5.95%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Sally Beauty 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 Sally Beauty have attracted decent investments and pushed the stock 30.1% 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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Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis Report
 
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