Why nCino (NCNO) Might be Well Poised for a Surge

Investors might want to bet on nCino (NCNO), 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 rising trend in estimate revisions, which is a result of growing analyst optimism on the earnings prospects of this company, 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.

For nCino, 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.

The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The earnings estimate of $0.26 per share for the current quarter represents a change of +62.5% from the number reported a year ago.

Over the last 30 days, two estimates have moved higher for nCino while one has gone lower. As a result, the Zacks Consensus Estimate has increased 42.86%.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $1.15 per share, representing a year-over-year change of +7.5%.

There has been an encouraging trend in estimate revisions for the current year as well. Over the past month, five estimates have moved up for nCino versus no negative revisions. This has pushed the consensus estimate 31% higher.

Favorable Zacks Rank

The promising estimate revisions have helped nCino 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

nCino shares have added 6.7% 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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nCino Inc. (NCNO): Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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