Why Heritage-Crystal Clean (HCCI) Might be Well Poised for a Surge

Heritage-Crystal Clean (HCCI) could be a solid addition to your portfolio given a notable revision in the company's earnings estimates. While the stock has been gaining lately, the trend might continue since its earnings outlook is still improving.

Analysts' growing optimism on the earnings prospects of this cleaning and waste-management 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. This insight is at the core of our stock rating tool -- the Zacks Rank.

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 Heritage-Crystal Clean, 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

For the current quarter, the company is expected to earn $0.11 per share, which is a change of -59.26% from the year-ago reported number.

Over the last 30 days, the Zacks Consensus Estimate for Heritage-Crystal Clean has increased 588.89% because three estimates have moved higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $0.12 per share represents a change of -86.96% from the year-ago number.

The revisions trend for the current year also appears quite promising for Heritage-Crystal Clean, with three estimates moving higher over the past month compared to no negative revisions. The consensus estimate has also received a boost over this time frame, increasing 145.1%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Heritage-Crystal Clean currently carries a Zacks Rank #1 (Strong 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 Heritage-Crystal Clean because of its solid estimate revisions, as evident from the stock's 7.8% 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.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
HeritageCrystal Clean, Inc. (HCCI) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research