Bull of the Day: Digital Turbine (APPS)

The NASDAQ’s been ripping again, and small-cap tech is quietly coming back to life. That’s when you want to hunt for stocks with the strongest earnings trends that are still flying under the radar. One way of finding those stocks is by leaning on the Zacks Rank. Stocks which are in the good graces of our Zacks Rank have the strongest underlying earnings trends when compared to other publicly traded companies. And, one name that fits that bill perfectly is today’s Bull of the Day.

I’m talking about Zacks Rank #1 (Strong Buy) Digital Turbine (APPS). Digital Turbine sits right at the crossroads of mobile advertising, app delivery, and content monetization. The company’s software comes pre-installed on smartphones, allowing carriers and manufacturers to seamlessly deliver apps and ads to users the moment they power up their devices. That placement power has made Digital Turbine a key player in the app economy, and after a few rough quarters, the growth engines are humming again.

Analysts have taken notice. Over the past week alone, analysts have upped the ante on next year’s earnings numbers. The bullish moves have increased our Zacks Consensus Estimate for the current year from 73 cents to 85 cents for next year. That means that earnings growth is now forecast to come in at 157% year-over-year.  That’s a welcome site for a stock that is seeing a 5.7% contraction in earnings for the current year.

Digital Turbine, Inc. Price and Consensus

Digital Turbine, Inc. price-consensus-chart | Digital Turbine, Inc. Quote

A quick look at the Price, Consensus & EPS Surprise chart on Zacks.com shows the turnaround story clearly. Estimates bottomed out in early 2024 and have been trending steadily higher since Q2. Six consecutive quarterly earnings beats brought about fresh analyst optimism. APPS now looks like a comeback story ready to break out of its multi-year funk. With a forward P/E around 18x, Digital Turbine trades well below the software industry’s 28x average and is even cheap relative to the broad market’s 24x earnings.

The chart shows a very strong positive trend. The 200-day moving average is positively sloped and down around $4.61 with the stock trading near $6. A retest of the 50-day happened on Friday. I am looking for the bulls to step in and bid the stock at this key technical level. The sharp pullback from over $8 on earnings has brought an opportunity to buy along with it.

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

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