CTO Realty, a real estate company, has recently been upgraded to a Zacks Rank #2 (Buy), making it an attractive investment opportunity. This upgrade stems from a positive trend in earnings estimates, which is a powerful indicator of future stock performance. The Zacks Rank system, widely recognized for its accuracy, assigns a rating to stocks based on their changing earnings picture.
The Zacks Consensus Estimate, which aggregates forecasts from sell-side analysts, for CTO Realty’s current and upcoming years has been steadily rising. This upward revision in earnings estimates signifies a positive outlook on the company’s underlying business.
The correlation between earnings estimate revisions and near-term stock movements is well-established. Institutional investors, who play a significant role in market movements, heavily rely on earnings and earnings estimates to determine the fair value of stocks. When these estimates increase, it signals a more positive outlook, prompting investors to buy the stock, thus driving its price higher.
The Zacks Rank system, with its rigorous methodology based on earnings estimate revisions, has a proven track record of success. Studies have shown that stocks with a Zacks Rank #1 (Strong Buy) have historically generated an average annual return of +25% since 1988.
Specifically for CTO Realty, analysts are projecting earnings of $1.94 per share for the fiscal year ending December 2024, representing a year-over-year increase of 1.6%. Moreover, the Zacks Consensus Estimate has increased by 9.3% over the past three months, indicating growing confidence in the company’s future earnings potential.
The Zacks Rank system stands apart from other rating systems as it maintains a balanced proportion of ‘buy’ and ‘sell’ ratings across its universe of over 4000 stocks. This ensures that ratings are not biased towards favorable recommendations. Only the top 5% of stocks receive a ‘Strong Buy’ rating, and the next 15% are classified as ‘Buy’. The placement of CTO Realty in the top 20% of the Zacks-covered stocks highlights its strong earnings estimate revision feature, indicating that it is well-positioned to deliver market-beating returns in the near term.
The upgrade to a Zacks Rank #2 suggests that CTO Realty is experiencing a positive shift in its earnings outlook, making it a promising investment option for those seeking growth potential in the near future.
