Earthstone Energy (ESTE) Soars 7.6%: Is Further Upside Left in the Stock?

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Earthstone Energy (ESTE) shares rallied 7.6% in the last trading session to close at $11.60. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock’s 28.6% gain over the past four weeks.

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Earthstone Energy extended its rally for the fifth straight day, driven by optimism over rising oil and natural gas prices. Mounting energy demand, bolstered by the energy crisis in Europe, and low supply have boosted commodity prices to multi-year highs. As the commodity prices are soaring, the upstream company’s profits are expected to witness a massive jump in the coming days. Also, its $73.2-million bolt-on acquisition in the Midland Basin on Oct 4 has been well accepted by investors. The move is expected to add roughly 4,400 barrels of oil equivalent per day of production to its portfolio.

This oil and gas company is expected to post quarterly earnings of $0.25 per share in its upcoming report, which represents a year-over-year change of +316.7%. Revenues are expected to be $88.57 million, up 115.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Earthstone Energy, the consensus EPS estimate for the quarter has been revised 1.5% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on ESTE going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>

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