Benzinga – Benzinga Contributor, Zacks.
BILL Holdings (NYSE:BILL) 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.
Over the past month, the payments software company's stock has returned -7.8%. This compares to a -3% change in the Zacks S&P 500 Composite Index. During this period, the Zacks Internet-Software industry, which BILL Holdings belongs to, has declined 4.1%. The key question here is: What is the future direction of the stock price?
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
At Zacks, we prioritize evaluating changes in company earnings estimates rather than focusing on anything else. This is because we believe that the fair value of a stock is determined by the present value of its future income stream.
Essentially, we look at how the sell-side analysts covering a stock are revising their earnings estimates to reflect the impact of the latest business trends. And as a company's earnings expectations rise, so will the fair value of its stock. If the fair value is higher than the current market price, investors will be more willing to buy the stock, causing the price to rise. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
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BILL Holdings is expected to post earnings of $0.53 per share for the current quarter, representing a +6% change from the year-ago period. The Zacks Consensus Estimate remained unchanged over the past 30 days.
Consensus earnings estimate for the current year of $2.23 represents a year-over-year change of +35.2%. Over the past 30 days, this estimate has changed by +109.5%.
Next year's consensus earnings estimate of $2.43 represents a +8.9% change from the earnings that BILL Holdings would have reported one year ago. Over the past month, the forecast has changed by -0.4%.
The Zacks Rank, a proprietary stock evaluation tool with an impressive, outside-audited track record of impressive results, leverages 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 earnings expectations, has given BILL Holdings a Zacks Rank of #3 (Hold).
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 BILL Holdings, the current quarter's consensus revenue estimate of $304.95 million represents a year-over-year change of +11.9%. Forecasts of $1.24 billion and $1.42 billion for the current and next fiscal year represent changes of +17.1% and +14.8%, respectively.
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Last reported results and surprising details
BILL Holdings reported revenue of $318.5 million in its last reported quarter. This represents a +22.5% year-on-year change. EPS for the same period was $0.63, compared to $0.42 a year ago.
The reported earnings represent a surprise of +7.38% when compared to the Zacks Consensus Estimate of $296.62 million. EPS surprise was +53.66%.
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. To predict a stock's future price performance, it is important to determine whether the current price accurately reflects the intrinsic value of the underlying business and the company's growth prospects.
The present 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), and the past value of your company Comparing a company to its peers based on these parameters will help you see how reasonable its stock price is. You can get a good idea of what
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.
BILL Holdings is rated F on this score, indicating that it trades at a premium relative to its industry peers.
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conclusion
The facts discussed here, and much of the other information on Zacks.com, may help you decide whether the market buzz surrounding BILL Holdings is worth paying attention to. However, the company's Zacks Rank #3 suggests it could outperform the broader market in the near term.
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