Carvana (CVNA – Free Report) shares soared 6.6% in the last trading session to close at $188.85. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock’s 29.5% loss over the past four weeks.
Carvana’s stock jumped after it reinstated an agreement to sell $4 billion worth of used-car loan receivables to Ally Financial. This yearlong deal follows claims by short-seller Hindenburg Research that Ally was distancing itself from its partnership with the online car marketplace.
This company is expected to post quarterly earnings of $0.25 per share in its upcoming report, which represents a year-over-year change of +125%. Revenues are expected to be $3.33 billion, up 37.2% 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 Carvana, 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 CVNA going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here >>>>
Carvana belongs to the Zacks Internet – Commerce industry. Another stock from the same industry, MercadoLibre (MELI – Free Report) , closed the last trading session 1.9% lower at $1,799.42. Over the past month, MELI has returned -5.8%.
For MercadoLibre
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