C3.ai Co., Ltd. (A.I. – (Free Report) recently appeared on the list of most searched stocks on Zacks.com. Therefore, you may need to consider some important factors that may influence the stock's performance in the near future.
The company's stock has returned -3.1% over the past month versus +3.3% for the Zacks S&P 500 Composite Index. The Zacks Computers – IT Services industry, which C3.ai, Inc. belongs to, has gained 2.2% in this period. The key question here is where the stock is likely to go in the short term.
Although media reports and rumors about material changes in a company's business prospects 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, C3.ai, Inc. is expected to post loss of $0.31 per share, which would represent a change of -138.5% from the year-ago period. The Zacks Consensus Estimate has changed -9.8% over the past 30 days.
The current year's consensus earnings estimate of -$0.67 represents a -59.5% change from the prior year. Over the past 30 days, this estimate has changed by +2.5%.
Next year's consensus earnings estimate of -$0.40 represents a +40.9% change from the earnings that C3.ai, Inc. would have reported one year ago. Over the past month, the forecast has changed by +36.2%.
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 consensus estimate change, along with three other factors related to the earnings estimate, has given C3.ai, Inc. a Zacks Rank of #3 (Hold).
The chart below shows the evolution of the company's consensus EPS estimate for the next 12 months.
12 months EPS
Expected revenue growth rate
Earnings growth is arguably the best indicator of a company's financial health, but nothing will happen if a company can't grow its revenue. After all, it's nearly impossible for a company to increase profits over a long period of time without increasing revenue. Therefore, it's important to know a company's earnings growth potential.
For C3.ai, Inc., the current quarter's consensus revenue estimate of $82.72 million represents a year-over-year change of +14.2%. Forecasts of $308.44 million and $369.14 million for the current and next fiscal year represent changes of +15.6% and +19.7%, respectively.
Last reported results and surprising details
C3.ai, Inc. reported revenue of $78.4 million in its last reported quarter. This represents a +17.6% year-over-year change. EPS for the same period was -$0.13, compared to -$0.06 a year ago.
The reported earnings represent a surprise of +3.27% when compared to the Zacks Consensus Estimate of $75.92 million. EPS surprise was +53.57%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company surpassed consensus revenue estimates two times during the 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.
Zacks Value Style Score (part of the Zacks Style Scores system). We pay close attention to both traditional and non-traditional metrics and rate stocks from A to F (A is better than B, B is better than C, and A is better than B. is also very useful in identifying whether a stock is overvalued, well-valued, or temporarily undervalued.
C3.ai, Inc. is rated F on this score, indicating that it trades at a premium relative to its industry peers. Click here to see the values of some of the metrics that determined this grade.
conclusion
The facts discussed here, and many others on Zacks.com, may help you decide whether the market buzz surrounding C3.ai, Inc. is worth paying attention to. However, his Zacks Rank #3 for the company suggests the company could match the market's performance. A broader market is expected in the short term.
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