BRP (DOOO) Soars 7.4%: Is Further Upside Left in the Stock?

BRP Inc. (DOOO) shares soared 7.4% in the last trading session to close at $53.03. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 1.9% gain over the past four weeks.

Shares of BRP are up as the company is making good progress on reducing inventory. It is also gearing up for major product launches. Sales of BRP’s Manitou asset sale, part of a broader Marine divestment strategy, has also streamlined portfolio. Further boosting sentiment, BRP’s Design & Innovation team won a Red Dot award, with the Can-Am Pulse earning top honors for design. All these factors have fueled investors confidence in the stock.

This company is expected to post quarterly earnings of $0.32 per share in its upcoming report, which represents a year-over-year change of -28.9%. Revenues are expected to be $1.3 billion, down 3.1% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For BRP, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on DOOO going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

BRP belongs to the Zacks Automotive - Original Equipment industry. Another stock from the same industry, Allison Transmission (ALSN), closed the last trading session 0.3% higher at $88.3. Over the past month, ALSN has returned -7.3%.

Allison Transmission's consensus EPS estimate for the upcoming report has changed -3% over the past month to $2.2. Compared to the company's year-ago EPS, this represents a change of +3.3%. Allison Transmission currently boasts a Zacks Rank of #3 (Hold).

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

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