Earnings Estimates Moving Higher for Oceaneering International (OII): Time to Buy?

Investors might want to bet on Oceaneering International (OII), 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 oilfield services 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 -- has this insight at its core.

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 Oceaneering International, 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.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.58 per share for the current quarter, which represents a year-over-year change of +5.5%.

Over the last 30 days, one estimate has moved higher for Oceaneering International compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 9.43%.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $2.10 per share, representing a year-over-year change of +8.8%.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Oceaneering International. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 11.11%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Oceaneering International 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

Investors have been betting on Oceaneering International because of its solid estimate revisions, as evident from the stock's 23.5% gain over the past four weeks. As its earnings growth prospects might push the stock higher, you may consider adding it to your portfolio right away.

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This article originally published on Zacks Investment Research (zacks.com).

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