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Essa Bancorp (ESSA) Moves 6% Higher: Will This Strength Last?

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Essa Bancorp (ESSA - Free Report) shares rallied 6% in the last trading session to close at $16.69. 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 1.2% loss over the past four weeks.

The performance of the banking sector/consumer loan providers is expected to improve significantly in the quarters ahead on the back of rising interest rates. A couple of days ago, the Federal Reserve hiked interest rates by 75 basis points, following one hike in May and another in March. More such rate hikes are expected in the year to tame the raging inflation. This has led to the bullish investor sentiments, which drove Essa Bancorp stock higher.

This bank is expected to post quarterly earnings of $0.42 per share in its upcoming report, which represents a year-over-year change of +2.4%. Revenues are expected to be $15.81 million, up 2.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Essa Bancorp, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on ESSA going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Essa Bancorp is a member of the Zacks Financial - Savings and Loan industry. One other stock in the same industry, Flagstar Bancorp , finished the last trading session 0.6% lower at $33.34. FBC has returned -8.5% over the past month.

Flagstar Bancorp's consensus EPS estimate for the upcoming report has remained unchanged over the past month at $1.25. Compared to the company's year-ago EPS, this represents a change of -54.4%. Flagstar Bancorp currently boasts a Zacks Rank of #5 (Strong Sell).


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