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Everything You Need to Know About Jackson Financial’s (JXN) Rating Upgrade to Strong Buy
Jackson Financial (JXN) could be a solid pick for investors given its recent upgrade to Zacks Rank #1 (Strong Buy). This improvement primarily reflects an upward trend in earnings estimates, which is one of the most powerful forces impacting stock prices.
A company’s changing earnings picture is at the heart of the Zacks Rank. The system tracks the Zacks Consensus Estimate — the consensus measure of EPS estimates from sell-side analysts covering the stock — for the current year and beyond.
Individual investors often have difficulty making decisions based on rating updates made by Wall Street analysts, as these are mostly driven by subjective factors that are difficult to see and measure in real time. In these situations, the Zacks rating system comes in handy because of the power of a changing earnings picture in determining near-term stock price movements.
As such, the Zacks rating upgrade for Jackson Financial is essentially a positive comment on its earnings outlook that could have a favorable impact on its stock price.
Most powerful force impacting stock prices
The change in a company’s future earnings potential, as reflected in earnings estimate revisions, has proven to be strongly correlated with the short-term movement of its stock prices. This is partly due to the influence of institutional investors who use earnings and earnings estimates to calculate the fair value of a company’s shares. An increase or decrease in earnings estimates in their valuation models simply results in a higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their mass investment action then leads to stock price movement.
For Jackson Financial, the rise in earnings estimates and the resulting rating upgrade fundamentally mean an improvement in the company’s underlying business. And investors’ appreciation of this improving business trend should push shares higher.
Harnessing the Power of Earnings Estimate Revisions
Empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock movements, so it could be truly rewarding if such revisions were tracked in making an investment decision. This is where the tried-and-true Zacks Rank stock rating system plays an important role as it effectively harnesses the power of earnings estimate revisions.
The Zacks Rank stock rating system, which uses four factors related to earnings estimates to classify stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), has an impressive track record externally audited record, with Zacks Rank #1 stocks generating an average annual return of +25% since 1988. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here >>>>.
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Earnings Estimate Revisions for Jackson Financial
For the fiscal year ending December 2024, this financial services company is expected to earn $16.36 per share, which represents a 27.4% change from the number reported a year ago.
Analysts have been steadily raising their estimates for Jackson Financial. Over the past three months, the Zacks Consensus Estimate for the company has moved 5.2% higher.
Conclusion
Unlike overly optimistic Wall Street analysts, whose rating systems tend to be weighted toward favorable recommendations, the Zacks rating system maintains an equal proportion of “buy” and “sell” ratings for its entire universe of more than 4000 shares at any time. Regardless of market conditions, only the top 5% of stocks covered by Zacks earn a “Strong Buy” rating and the next 15% earn a “Buy” rating. Therefore, a stock’s placement in the top 20% of stocks covered by Zacks indicates its superior earnings estimate revision characteristics, making it a solid candidate to produce market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
Jackson Financial’s upgrade to a Zacks Rank #1 puts it in the top 5% of stocks covered by Zacks for estimate revisions, implying that the stock could move higher in the near term.
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