Algonquin Power & Utilities (AQN) could be a solid addition to your portfolio given its recent upgrade to a Zacks Rank #2 (Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates — one of the most powerful forces impacting stock prices.
A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate — the consensus measure of EPS estimates from the sell-side analysts covering the stock — for the current and following years.
As such, the Zacks rating upgrade for Algonquin Power & Utilities is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Fundamentally speaking, rising earnings estimates and the consequent rating upgrade for Algonquin Power & Utilities imply an improvement in the company's underlying business. Investors should show their appreciation for this improving business trend by pushing the stock higher.
This utility operator is expected to earn $0.65 per share for the fiscal year ending December 2018, which represents a year-over-year change of 12.1%.
Analysts have been steadily raising their estimates for Algonquin Power & Utilities. Over the past three months, the Zacks Consensus Estimate for the company has increased 3.6%.
The upgrade of Algonquin Power & Utilities to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.