Vector Group (VGR) appears an attractive pick given a noticeable improvement in the company's earnings outlook. The stock has been a strong performer lately, and the momentum might continue with analysts still raising their earnings estimates for the company.

The upward trend in estimate revisions for this discount cigarette maker reflects growing optimism of analysts on its earnings prospects, 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 Vector, there has been strong agreement among the covering analysts in raising earnings estimates, which has helped push consensus estimates considerably higher for the next quarter and full year.

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $0.33 per share, which is a change of 0% from the year-ago reported number.

The Zacks Consensus Estimate for Vector has increased 6.45% over the last 30 days, as one estimate has gone higher compared to no negative revisions.

Current-Year Estimate Revisions

The company is expected to earn $1.22 per share for the full year, which represents a change of -0.81% from the prior-year number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Vector. Over the past month, one estimate has moved higher compared to no negative revisions, helping the consensus estimate increase 5.17%.

Favorable Zacks Rank

The promising estimate revisions have helped Vector earn 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

Vector shares have added 24.7% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.



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