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Earnings Estimates Rising for DocuSign (DOCU): Will It Gain?

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Investors might want to bet on DocuSign (DOCU - Free Report) , as earnings estimates for this company have been showing solid improvement lately. The stock has already gained solid short-term price momentum, and this trend might continue with its still improving earnings outlook.

The upward trend in estimate revisions for this provider of electronic signature technology 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. Our stock rating tool -- the Zacks Rank -- has this insight at its core.

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 DocuSign, 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.

Current-Quarter Estimate Revisions

The company is expected to earn $0.63 per share for the current quarter, which represents a year-over-year change of -3.08%.

Over the last 30 days, seven estimates have moved higher for DocuSign compared to no negative revisions. As a result, the Zacks Consensus Estimate has increased 491.67%.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $2.84 per share represents a change of +39.9% from the year-ago number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for DocuSign. Over the past month, eight estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 37.42%.

Favorable Zacks Rank

The promising estimate revisions have helped DocuSign earn 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

DocuSign shares have added 31.1% 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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