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Why Centerra Gold (CGAU) Might be Well Poised for a Surge

Zacks Equity Research
·2-min read

Investors might want to bet on Centerra Gold Inc. (CGAU), 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.

Analysts' growing optimism on the earnings prospects of this 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. 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 Centerra Gold, 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.

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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 $0.23 per share for the current quarter represents a change of +215% from the number reported a year ago.

Over the last 30 days, the Zacks Consensus Estimate for Centerra Gold has increased 15% because one estimate has moved higher while one has gone lower.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $0.74 per share represents a change of +1380% from the year-ago number.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, three estimates have moved up for Centerra Gold versus no negative revisions. This has pushed the consensus estimate 45.1% higher.

Favorable Zacks Rank

Thanks to promising estimate revisions, Centerra Gold currently carries a Zacks Rank #2 (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

Centerra Gold shares have added 15% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.

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Centerra Gold Inc. (CGAU) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research