Hologic (Horkus – Free Report) has been one of the most-watched stocks by Zacks.com visitors lately. Therefore, we recommend considering several factors that can affect a stock's short-term performance.
The medical device maker's stock has returned -0.7% over the past month versus a +4.6% change in the Zacks S&P 500 Composite Index. The Zacks Medical – Instruments industry, which includes Hologic, has gained 3.9% in this period. The key question here is where the stock is likely to go in the short term.
While media reports and rumors about significant changes in a company's business outlook typically trigger stock price trends and lead to immediate price movements, there are always certain fundamental factors that ultimately drive the buy-and-hold decision. Exists.
Regarding revisions to performance forecasts
Zacks prioritizes evaluating changes in a company's future earnings expectations above all else. That's because we believe that the present value of future income streams determines the fair value of a stock.
Our analysis is fundamentally based on how the sell-side analysts covering a given stock are revising their earnings estimates to account for the latest business trends. As a company's earnings expectations rise, so does the fair value of its stock. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, which causes the stock price to rise. For this reason, empirical research has shown that there is a strong correlation between trends in earnings forecast revisions and short-term stock price movements.
For the current quarter, Hologic is expected to post earnings of $0.98 per share, which would represent a 7.6% decline from the year-ago period. The Zacks Consensus Estimate has changed +1.2% over the past 30 days.
The current year's consensus earnings estimate of $4.01 represents a +1.3% change from the prior year. Over the past 30 days, this estimate has changed by +1.2%.
Next year's consensus earnings estimate of $4.35 represents a +8.5% change from the earnings that Hologic was expected to report a year ago. Over the past month, the forecast has changed by +0.9%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, harnesses the power of earnings estimate revisions to be a more conclusive indicator of a stock's short-term price performance. . The magnitude of the recent change in consensus estimates, as well as three other factors related to earnings expectations, earn Hologic a Zacks Rank #2 (Buy).
The chart below shows the company's consensus EPS estimate over the next 12 months over time.
12 months EPS
Revenue growth forecast
There's no question that a company's profit growth is the best indicator of its financial health, but nothing will happen if it doesn't make a profit. It's nearly impossible for a company to expand its bottom line without growing it over the long term. Therefore, it's important to know a company's earnings growth potential.
For Hologic, the current quarter's consensus revenue estimate of $995.1 million represents a -3.1% change from the year-ago period. Forecasts of $3.98 billion and $4.19 billion for the current and next fiscal year represent changes of -1.3% and +5.2%, respectively.
Last reported results and surprising details
Hologic reported revenue of $1.01 billion in its last reported quarter. This represents a -5.7% year-over-year change. EPS for the same period was $0.98, compared to $1.07 a year ago.
The reported earnings represent a surprise of +3.04% when compared to the Zacks Consensus Estimate of $983.25 million. EPS surprise was +3.16%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company has surpassed consensus revenue estimates every time during this period.
evaluation
You cannot make efficient investment decisions without considering stock valuation. Whether a stock's current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects is a key determinant of future stock performance.
Compare the current value of a company's valuation multiples, such as price to earnings (P/E), price to sales (P/S), and price to cash flow (P/CF), to its own value, while also Value helps determine whether a stock is fairly valued, overvalued, or undervalued, and by comparing a company to its peers based on these parameters, you can determine whether a stock is reasonably priced. I can understand the gender.
The Zacks Value Style Score (part of the Zacks Style Scores system) pays close attention to both traditional and non-traditional valuation metrics and rates stocks from A to F, where A is better than B. , B is better than C, A is better than B, and B is better than C). ), can be very helpful in identifying whether a stock is overvalued, properly valued, or temporarily undervalued.
Hologic is rated B on this score, indicating that it trades at a discount to its peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding Hologic is worth paying attention to. However, the company's Zacks Rank #2 suggests it has the potential to outperform the broader market in the near term.
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