InterDigital (IDCC Quick QuoteIDCC - Free Report) 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 wireless research and development company 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 -- is principally built on this insight.

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.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for InterDigital, as there has been strong agreement among the covering analysts in raising estimates.

Current-Quarter Estimate Revisions

For the current quarter, the company is expected to earn $4.04 per share, which is a change of +186.52% from the year-ago reported number.

Over the last 30 days, two estimates have moved higher for InterDigital while one has gone lower. As a result, the Zacks Consensus Estimate has increased 222.39%.

Current-Year Estimate Revisions

For the full year, the earnings estimate of $13.53 per share represents a change of +46.59% from the year-ago number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for InterDigital. Over the past month, two estimates have moved higher compared to one negative revision, helping the consensus estimate increase 49.94%.

Favorable Zacks Rank

Thanks to promising estimate revisions, InterDigital 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

While strong estimate revisions for InterDigital have attracted decent investments and pushed the stock 18.1% higher over the past four weeks, further upside may still be left in the stock. So, you may consider adding it to your portfolio right away.