Carvana (CVNA) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

The upward trend in estimate revisions for this 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. 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.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Carvana, 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 $0.25 per share, which is a change of +125% from the year-ago reported number.

The Zacks Consensus Estimate for Carvana has increased 237.84% over the last 30 days, as six estimates have gone higher compared to no negative revisions.

Current-Year Estimate Revisions

For the full year, the company is expected to earn $1.16 per share, representing a year-over-year change of +54.67%.

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 Carvana versus no negative revisions. This has pushed the consensus estimate 164.76% higher.

Favorable Zacks Rank

The promising estimate revisions have helped Carvana 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

While strong estimate revisions for Carvana have attracted decent investments and pushed the stock 23.9% 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.

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