Top 2 Small Cap Healthcare Stocks to Buy Before Rate CutsAmphastar Pharmaceuticals NASDAQ: AMPH executives told investors at the Jefferies Healthcare Conference that the company is maintaining expectations for mid- to high-single-digit revenue growth in 2026, supported by a new generic launch, Primatene Mist growth and selected API sales from its China business.
Bill Peters, chief financial officer of Amphastar, said the company continues to build on its base in complex generic and hospital injectable products while expanding into proprietary and biosimilar medicines. Peters said Amphastar has about a half-dozen proprietary products and three biosimilars in development, using experience gained from complex generics, peptides, clinical trials and human factors studies.
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Generic Atrovent Launch Seen as Key Growth Driver Promising Small Biotech Amphastar Sees Actionable Pullback Executives said the company’s generic ipratropium bromide product, a generic version of Atrovent, is expected to be the largest driver of revenue growth this year. Amphastar launched the product in mid-April and, according to Jacob Liawatidewi, executive vice president of corporate administration, is currently the only generic on the market.
Liawatidewi said Amphastar successfully brought the product through a Paragraph IV challenge and has six months of exclusivity, which he said runs until Oct. 6. He added that the company has not heard of other ANDA filers, though that does not mean none exist. Based on Amphastar’s development work, Liawatidewi said the product has a “high bar” for bioequivalence studies and could remain durable as a sole generic “for a few years” before competitors catch up.
Using IQVIA sales data of about $112 million for 2025, Liawatidewi said rebates likely overstate the market size. He estimated the full generic market could be about $55 million after adjustments, with Amphastar potentially capturing more than 50% and possibly as much as 80% as the sole generic. That could represent roughly $40 million in annual sales, assuming no authorized generic enters the market.
BAQSIMI Pricing Pressure and 340B Issue Executives also discussed BAQSIMI, the nasal glucagon product Amphastar acquired from Eli Lilly. Peters said the company lowered BAQSIMI guidance to flat to up single digits for the year after a weaker first quarter, but still expects companywide revenue growth to remain in the mid- to high-single-digit range.
Liawatidewi said BAQSIMI was affected by 340B “double discounting,” in which contract pharmacies serving 340B hospitals buy product at a discounted 340B price and then submit rebates tied to commercial insurance or pharmacy benefit managers. Peters said that issue contributed to about a 20% pricing decrease in the first quarter compared with the prior year.
Amphastar engaged a third-party service provider in May to mitigate the issue. Peters said the vendor has experience with larger pharmaceutical companies and believes it can eliminate about 80% of the double discounting. He said the impact should begin to appear partially in the second quarter and more fully by the third quarter. Amphastar also took a 3% price increase beginning in May to help offset the pricing pressure.
The company is also reassessing BAQSIMI sales outside the United States. Peters said Amphastar was contractually obligated to continue selling BAQSIMI in every country where Lilly had sold it for three years, a period ending in late June. After July 1, Amphastar plans to discontinue sales in five or six countries where the product loses money due to low prices or regulatory costs, though sales could continue temporarily in some markets due to inventory or notice-period requirements.
Biosimilar Insulin Aspart Targeted for 2027 Launch Peters said Amphastar’s biosimilar insulin aspart product is under regulatory review, and the company continues to expect a launch in 2027. Amphastar is seeking interchangeability, which Peters described as a higher hurdle. He said the company believes it has provided sufficient data and responded to FDA concerns in a way that could support an interchangeable designation, though approval as a biosimilar without interchangeability remains possible.
Peters said IQVIA data place the insulin aspart market at about $1.4 billion in sales, while cautioning that IQVIA data tend to overstate actual sales. If approved, Amphastar expects to be the fourth player in the market, the third biosimilar and potentially the second interchangeable biosimilar. Asked whether annual sales of $25 million to $50 million were reasonable, Peters said the higher end could be achievable with interchangeability.
Pipeline and Business Development Focus Liawatidewi said Amphastar’s synthetic corticotropin program remains in preclinical work intended to support an IND filing in 2027 or early 2027. He said Amphastar has not yet aligned with the FDA on whether the product would be viewed as comparable to existing porcine-based corticotropin or as a true new chemical entity. He added that Amphastar would most likely redo data generated in China by its licensing partner for U.S. submission.
Peters also discussed three in-licensed peptide-based assets from a Chinese biotech company, including two oncology products and one wet age-related macular degeneration product. The most advanced disclosed product is a potential pancreatic cancer therapy that uses a peptide conjugate to help direct molecules toward tumors. Peters said Amphastar’s experience with peptide APIs and finished products contributed to the company’s interest in those programs.
On capital allocation, Peters said Amphastar is focused on fully funding R&D, capital expenditures and its share repurchase program. The company added $50 million to the buyback program in March. Peters said future excess cash may be directed toward business development, particularly proprietary products closer to market or already de-risked through clinical trials, and that Amphastar could borrow for the right opportunity. He said the BAQSIMI transaction, which included $500 million up front plus deferred and milestone payments, would represent the “outer limit” of deal size the company could pursue.
Margins Expected to Improve From First Quarter Peters said first-quarter gross margin represented an “absolute trough” and should improve in subsequent quarters as BAQSIMI pricing pressure eases. He said R&D spending is expected to remain high and could increase as a percentage of sales, while G&A should decline as a percentage of sales after a temporary uptick tied to efficiency projects and new systems. Selling expense is expected to remain relatively consistent as a percentage of sales, with potential for improvement over time through economies of scale.
About Amphastar Pharmaceuticals NASDAQ: AMPHAmphastar Pharmaceuticals, Inc is a specialty pharmaceutical company headquartered in Rancho Cucamonga, California. Founded in 2004, Amphastar focuses on the development, manufacturing and commercialization of injectable and inhalation products. The company's manufacturing facilities in California produce both generic and proprietary formulations designed to address urgent and chronic medical conditions.
Amphastar's portfolio includes a range of injectable generics such as epinephrine, naloxone and lidocaine, serving hospital, emergency medical and retail pharmacy channels.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
Should You Invest $1,000 in Amphastar Pharmaceuticals Right Now?Before you consider Amphastar Pharmaceuticals, you'll want to hear this.
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SAN DIEGO, June 08, 2026 (GLOBE NEWSWIRE) -- Johnson Fistel, PLLP is investigating whether Amphastar Pharmaceuticals, Inc. (NASDAQ: AMPH) or certain of its executive officers violated federal securities laws. The investigation focuses on investors’ losses and whether they may be recovered under federal securities laws.
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If you purchased Amphastar securities and suffered losses on your investment, join our investigation now: Click Here to Join the Investigation.
Or for more information, contact Jim Baker at [email protected] or (619) 814-4471.
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Background of the Investigation
On May 7, 2026, Amphastar reported its financial results for the first quarter of 2026. The Company disclosed that BAQSIMI revenues decreased 15% year-over-year to $32.4 million, compared to $38.4 million in the prior-year period, despite an 8% increase in units sold.
Amphastar attributed the BAQSIMI revenue decline to lower average selling prices, stating that the lower average selling price was driven by higher rebates and higher 340B pharmacy discounts, some of which may have been duplicated. The Company also stated that it now expected BAQSIMI revenue growth to be flat to up low single digits for 2026 due to the previously mentioned pricing pressures.
Following these disclosures, Amphastar’s stock price fell more than 20% on May 8, 2026, causing significant losses to investors.
On May 13, 2026, Amphastar provided additional detail regarding BAQSIMI at the Bank of America Global Healthcare Conference. Management stated that “the biggest surprise was the impact of the double discounting” from 340B programs on BAQSIMI.
In light of these disclosures, Johnson Fistel is investigating whether Amphastar complied with federal securities laws. If you suffered losses, contact Johnson Fistel for more information.
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Top 2 Small Cap Healthcare Stocks to Buy Before Rate CutsAmphastar Pharmaceuticals NASDAQ: AMPH is positioning itself for a broader shift from complex generics toward proprietary medicines and biosimilars, Chief Financial Officer and Executive Vice President of Finance Bill Peters told investors at the East Coast IDEAS Conference.
Peters described Amphastar as a “fully integrated pharmaceutical company” with in-house product development, active pharmaceutical ingredient manufacturing, finished product manufacturing in the United States, and marketing and distribution capabilities. He said the company’s operating model is built around what management calls a “3 H focus”: high-quality products, high efficiency of operations and high technology to drive the pipeline.
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Promising Small Biotech Amphastar Sees Actionable Pullback According to Peters, Amphastar historically focused on complex generics, including enoxaparin, but has been moving its pipeline toward proprietary products that the company believes can generate more durable cash flows. He said that in 2021, roughly two-thirds of Amphastar’s pipeline consisted of generics, with 21% proprietary products and 16% biosimilars. The company set a goal to shift within five years to a mix of 50% proprietary products, 35% biosimilars and 15% generics.
“We are very close to those numbers today, and I think by the end of the year, we’ll be even closer,” Peters said.
R&D spending expected to rise as proprietary pipeline expands Peters said Amphastar spends more on research and development than many generic drug companies, reflecting its effort to move into branded and proprietary products. He said R&D spending increased significantly last year and represented about 11.9% of revenue after a trough year in 2024. Amphastar expects that percentage to continue increasing over the next few years as it advances more proprietary programs.
The company’s technical capabilities include particle engineering, drug characterization, immunogenicity evaluation, peptide and protein development, and biosimilar work. Peters cited Primatene MIST, the only FDA-approved over-the-counter asthma inhaler, as an example of Amphastar’s formulation capabilities. He also pointed to the company’s glucagon kit, which he said was the first generic version of Eli Lilly’s product and remained the only generic on the market for four years due to its complexity.
Amphastar’s current infrastructure includes three U.S. manufacturing facilities for finished products and two overseas facilities, in China and France, for active pharmaceutical ingredient production.
Proprietary programs include epinephrine nasal spray, peptides and synthetic corticotropin Peters highlighted several proprietary development programs, including AMP-101, an intranasal version of epinephrine for anaphylaxis that is currently in Phase 1 studies. Other early-stage programs include AMP-105, AMP-107 and AMP-109, which Amphastar in-licensed from a Chinese biotech firm last year. Peters said AMP-105 and AMP-109 are oncology programs, while AMP-107 targets wet age-related macular degeneration.
For AMP-107, Peters said Amphastar is working on an eye-drop approach that could potentially reduce reliance on injections into the eye. He described AMP-109 as a peptide-coupled docetaxel program being tested in pancreatic cancer models. Peters also discussed AMP-110, a synthetic human corticotropin that he said is similar to Acthar Gel and targets a market Amphastar expects could reach about $1 billion by the time it reaches the market.
In response to an investor question, Peters said the company intends to take proprietary programs at least through Phase 2 before evaluating whether to continue development internally or partner with a larger pharmaceutical company. He noted that later-stage oncology trials can be expensive.
“To do all of these products all through Phase 3 would probably require more money than we would be able to commit at this time,” Peters said. “I think it’ll be a good problem to have if we get to that point.”
BAQSIMI and Primatene MIST remain key branded products Peters said Amphastar has achieved branded product success with BAQSIMI, an intranasal glucagon product acquired from Eli Lilly that treats hypoglycemia. Amphastar sells BAQSIMI in the United States and 25 other countries. Peters said the company forecasts peak annual BAQSIMI sales of $250 million to $275 million and long-term incremental adjusted peak EPS of $2 to $2.50 per share from the product.
For Primatene MIST, Peters said Amphastar is increasing physician sampling and launching a new advertising campaign. The product generated $109 million in sales last year, making it Amphastar’s second-largest product, and the company is forecasting high-single-digit growth this year. Amphastar is also developing a lower-global-warming-potential propellant formulation and has received one patent related to that formulation, with another in development.
Biosimilars, inhalation products and diabetes portfolio Amphastar’s biosimilar pipeline includes insulin aspart, recombinant human insulin and AMP-028, an undisclosed biosimilar for which Peters said the company believes it has a strategic advantage in active pharmaceutical ingredient production. The company expects a commercial launch of insulin aspart in 2027 and plans to file recombinant human insulin with the FDA in the first half of next year.
Peters also discussed a generic GLP-1 program, which he said targets a molecule with estimated U.S. IQVIA sales of about $300 million. In response to a question, he said IQVIA figures often overstate actual sales and that Amphastar expects the market to be crowded with generic entrants. He said the product could be incremental to sales but is not expected to be a major growth driver.
The company recently launched ipratropium bromide in April after approval in February, and Peters said Amphastar is currently the only generic seller of that product. He described it as a significant launch for 2026.
Capital structure supports near-term R&D plans, CFO says During the question-and-answer session, Peters said Amphastar has the capital structure to support its R&D plans through Phase 2 for its key proprietary programs. He said the company has $285 million in cash, an undrawn $200 million revolving debt facility in the United States and generates more than $200 million in annual EBITDA.
Peters said Amphastar carries about $600 million of debt, including a $250 million term loan and $345 million of convertible debt securities. He said the company believes it can refinance the debt when due, likely paying down some portion while refinancing the rest.
“With the cash we can generate right now, we can take care of the R&D responsibilities that we have for the next five years,” Peters said.
About Amphastar Pharmaceuticals NASDAQ: AMPHAmphastar Pharmaceuticals, Inc is a specialty pharmaceutical company headquartered in Rancho Cucamonga, California. Founded in 2004, Amphastar focuses on the development, manufacturing and commercialization of injectable and inhalation products. The company's manufacturing facilities in California produce both generic and proprietary formulations designed to address urgent and chronic medical conditions.
Amphastar's portfolio includes a range of injectable generics such as epinephrine, naloxone and lidocaine, serving hospital, emergency medical and retail pharmacy channels.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
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DALLAS--(BUSINESS WIRE)--Tenet Healthcare Corporation (NYSE: THC) is scheduled to present at the BofA Securities Health Care Conference on Wednesday, May 13, 2026.
Tenet Healthcare (THC - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Shares of this hospital operator have returned -4% over the past month versus the Zacks S&P 500 composite's +9.5% change. The Zacks Medical - Hospital industry, to which Tenet belongs, has lost 2.4% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Tenet is expected to post earnings of $4.15 per share, indicating a change of +3.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.1% over the last 30 days.
For the current fiscal year, the consensus earnings estimate of $17.56 points to a change of +4.7% from the prior year. Over the last 30 days, this estimate has changed +1.5%.
For the next fiscal year, the consensus earnings estimate of $17.58 indicates a change of +0.1% from what Tenet is expected to report a year ago. Over the past month, the estimate has changed +1%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Tenet is rated Zacks Rank #2 (Buy).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
In the case of Tenet, the consensus sales estimate of $5.42 billion for the current quarter points to a year-over-year change of +2.8%. The $21.98 billion and $22.41 billion estimates for the current and next fiscal years indicate changes of +3.1% and +1.9%, respectively.
Last Reported Results and Surprise HistoryTenet reported revenues of $5.37 billion in the last reported quarter, representing a year-over-year change of +2.8%. EPS of $4.82 for the same period compares with $4.36 a year ago.
Compared to the Zacks Consensus Estimate of $5.39 billion, the reported revenues represent a surprise of -0.36%. The EPS surprise was +14.49%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
As part of the Zacks Style Scores system, the Zacks Value Style Score (which evaluates both traditional and unconventional valuation metrics) organizes stocks into five groups ranging from A to F (A is better than B; B is better than C; and so on), making it helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Tenet is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Tenet. However, its Zacks Rank #2 does suggest that it may outperform the broader market in the near term.
Tenet Healthcare Corporation (THC - Free Report) reported first-quarter 2026 adjusted earnings per share (EPS) of $4.82, which surpassed the Zacks Consensus Estimate by 14.5%. The bottom line increased 10.6% year over year.
Net operating revenues advanced 2.8% year over year to $5.37 billion. The top line marginally missed the consensus mark by 0.4%.
The quarterly results benefited from strong same-facility revenue growth and higher adjusted admissions, along with solid contributions from acquisitions that supported the Ambulatory Care segment. However, the upside was partly offset by an unfavorable payer mix and higher operating costs, particularly elevated supply expenses.
Inside THC’s Q1 PerformanceAdjusted net income of $422 million climbed 1.9% year over year in the quarter.
Adjusted EBITDA of $1.2 billion surpassed our estimate of $1.1 billion, driven by solid same-facility revenue growth and disciplined expense management. However, the metric dipped 0.1% year over year due to an unfavorable payer mix, reflecting lower exchange admissions. Adjusted EBITDA margin contracted 70 basis points year over year to 21.6%.
Salaries, wages and benefits increased 2.6% year over year to $2.2 billion in the first quarter, while supply costs rose 6% and net other operating expenses increased 2.9%.
Q1 Segmental DetailsAmbulatory Care: The segment’s net operating revenues climbed 10.6% year over year to $1.3 billion in the quarter, driven by strong growth in consolidated same-facility net patient service revenues, contributions from facility acquisitions and an expansion of service lines. The metric topped our estimate by 2.3%.
Adjusted EBITDA was $484 million, which advanced 6.1% year over year. The metric missed our estimate by 2.6%. Adjusted EBITDA margin deteriorated 150 bps year over year to 36.7%.
Hospital Operations and Services: The segment recorded net operating revenues of $4.05 billion, which inched up 0.5% year over year driven by higher adjusted admissions, partly offset by an unfavorable payer mix. The metric missed our model estimate by 1.6%.
Adjusted EBITDA decreased 4.1% year over year to $678 million in the quarter, affected by an unfavorable payer mix. Adjusted EBITDA margin of 16.7% was down 80 bps year over year.
THC’s Financial Position (as of March 31, 2026)Tenet Healthcare exited the first quarter with cash and cash equivalents of $2.97 billion, which improved from the 2025-end level of $2.88 billion. Total assets of $31.2 billion rose from the 2025-end figure of $29.7 billion.
Long-term debt, net of the current portion, amounted to $13.1 billion, which inched up marginally from the figure as of Dec. 31, 2025. The current portion of long-term debt totaled $81 million.
Total shareholders’ equity of $4.8 billion increased from the 2025-end level of $4.2 billion.
THC generated $1.6 billion of net cash from operations in the first quarter of 2026, which advanced 101.3% year over year. Free cash flows improved 127.6% year over year to $1.5 billion in the quarter.
THC’s Share Repurchase UpdateTHC bought back 1.35 million of common shares worth $318 million in the first quarter.
THC Provides Outlook for 2026Net operating revenues are projected in the range of $21.5-$22.3 billion, unchanged from prior guidance and up from $21.3 billion in 2025. Hospital segment revenues are expected to be between $16 billion and $16.6 billion, while the Ambulatory Care unit is forecasted to generate $5.5–$5.7 billion.
Adjusted EBITDA is likely to remain between $4.485 billion and $4.785 billion in 2026, compared with the 2025 figure of $4.566 billion. Adjusted EBITDA margin is estimated to be in the 20.9-21.5% band, the mid-point of which indicates a decline from the 2025 level of 21.4%. Adjusted EPS for 2026 is anticipated to be in the band of $16.38-$18.68, up from the previous guidance of $16.19-$18.47.
Net cash provided by operating activities is now expected to be between $3.64 billion and $4.09 billion. Free cash flow is now estimated to remain between $2.94 billion and $3.29 billion. Capital expenditures are projected in the range of $700-$800 million.
Tenet Healthcare currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
How Did Other Medical Companies Perform?Here are some stocks from the broader Medical space that have also reported their quarterly results: HCA Healthcare, Inc. (HCA - Free Report) , UnitedHealth Group Incorporated (UNH - Free Report) and The Ensign Group, Inc. (ENSG - Free Report)
HCA Healthcare reported first-quarter 2026 adjusted earnings per share of $7.15, slightly below the Zacks Consensus Estimate of $7.17, though up 10.9% year over year. Revenues increased 4.3% to $19.1 billion but narrowly missed the consensus estimate by 0.1%. HCA’s performance was affected by declines in same-facility inpatient and outpatient surgeries, along with elevated operating expenses, partially offset by modest growth in emergency room visits.
UnitedHealth Group reported first-quarter 2026 adjusted earnings per share of $7.23, which surpassed the Zacks Consensus Estimate of $6.46 and increased 0.4% year over year. Revenues rose 2% to $111.7 billion and exceeded the consensus estimate by 2.1%. UNH’s performance was driven by growth in commercial fee-based membership and strength in Optum Rx, partially offset by weakness in Optum Health and a decline in risk-based membership.
Ensign Group reported a first-quarter 2026 adjusted EPS of $1.85, which beat the Zacks Consensus Estimate by 3.4%. The bottom line improved 21.7% year over year. Operating revenues advanced 18.4% year over year to $1.4 billion. The top line marginally missed the consensus mark by 0.07%. ENSG’s strong performance was driven by higher occupancy, patient days and contributions from newly acquired and transitioning facilities, along with growth in rental income. However, these gains were partly offset by increased expenses.
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What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
But it can feel overwhelming to pick the right stocks for you and your investing goals with over 800 top-rated stocks to choose from.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
A stock with a #4 (Sell) or #5 (Strong Sell) rating, for instance, even one with Scores of A and B, will still have a declining earnings forecast, and a greater chance its share price will fall too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Tenet Healthcare (THC - Free Report) Founded in 1967 and headquartered in Dallas, TX, Tenet Healthcare Corp., is an investor-owned health care services company, which owns and operates general hospitals and related health care facilities for urban and rural communities in numerous states, and has offices in California and Florida. The company has investments in other health care companies and is one of the largest investor-owned health care delivery systems in the United States.
THC is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 11.05; value investors should take notice.
For fiscal 2026, seven analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.66 to $17.56 per share. THC boasts an average earnings surprise of +20.6%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, THC should be on investors' short list.
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Tenet Healthcare (THC - Free Report) . THC is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
We also note that THC holds a PEG ratio of 0.81. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. THC's industry currently sports an average PEG of 1.60. Over the past 52 weeks, THC's PEG has been as high as 1.30 and as low as 0.55, with a median of 0.81.
Finally, investors will want to recognize that THC has a P/CF ratio of 7.51. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. THC's current P/CF looks attractive when compared to its industry's average P/CF of 7.65. Over the past 52 weeks, THC's P/CF has been as high as 7.76 and as low as 2.83, with a median of 4.42.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Tenet Healthcare is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, THC feels like a great value stock at the moment.
Tenet Healthcare (THC - Free Report) closed the last trading session at $196.66, gaining 0% over the past four weeks, but there could be plenty of upside left in the stock if short-term price targets set by Wall Street analysts are any guide. The mean price target of $248.1 indicates a 26.2% upside potential.
The mean estimate comprises 20 short-term price targets with a standard deviation of $20.8. While the lowest estimate of $210.00 indicates a 6.8% increase from the current price level, the most optimistic analyst expects the stock to surge 46.5% to reach $288.00. It's very important to note the standard deviation here, as it helps understand the variability of the estimates. The smaller the standard deviation, the greater the agreement among analysts.
While the consensus price target is a much-coveted metric for investors, solely banking on this metric to make an investment decision may not be wise at all. That's because the ability and unbiasedness of analysts in setting price targets have long been questionable.
But, for THC, an impressive average price target is not the only indicator of a potential upside. Strong agreement among analysts about the company's ability to report better earnings than they predicted earlier strengthens this view. While a positive trend in earnings estimate revisions doesn't gauge how much a stock could gain, it has proven to be powerful in predicting an upside.
Price, Consensus and EPS Surprise
Here's What You Should Know About Analysts' Price TargetsAccording to researchers at several universities across the globe, a price target is one of many pieces of information about a stock that misleads investors far more often than it guides. In fact, empirical research shows that price targets set by several analysts, irrespective of the extent of agreement, rarely indicate where the price of a stock could actually be heading.
While Wall Street analysts have deep knowledge of a company's fundamentals and the sensitivity of its business to economic and industry issues, many of them tend to set overly optimistic price targets. Are you wondering why?
They usually do that to drum up interest in shares of companies that their firms either have existing business relationships with or are looking to be associated with. In other words, business incentives of firms covering a stock often result in inflated price targets set by analysts.
However, a tight clustering of price targets, which is represented by a low standard deviation, indicates that analysts have a high degree of agreement about the direction and magnitude of a stock's price movement. While that doesn't necessarily mean the stock will hit the average price target, it could be a good starting point for further research aimed at identifying the potential fundamental driving forces.
That said, while investors should not entirely ignore price targets, making an investment decision solely based on them could lead to disappointing ROI. So, price targets should always be treated with a high degree of skepticism.
Why THC Could Witness a Solid UpsideAnalysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason to expect an upside in the stock. That's because empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Over the last 30 days, the Zacks Consensus Estimate for the current year has increased 2%, as seven estimates have moved higher compared to no negative revision.
Moreover, THC currently has a Zacks Rank #2 (Buy), which means it is in the top 20% of more than 4,000 stocks that we rank based on four factors related to earnings estimates. Given an impressive externally-audited track record, this is a more conclusive indication of the stock's potential upside in the near term. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>> .
Therefore, while the consensus price target may not be a reliable indicator of how much THC could gain, the direction of price movement it implies does appear to be a good guide.
When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
Let's take a look at what these Wall Street heavyweights have to say about Tenet Healthcare (THC - Free Report) before we discuss the reliability of brokerage recommendations and how to use them to your advantage.
Tenet currently has an average brokerage recommendation (ABR) of 1.39, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 22 brokerage firms. An ABR of 1.39 approximates between Strong Buy and Buy.
Of the 22 recommendations that derive the current ABR, 16 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 72.7% and 13.6% of all recommendations.
Brokerage Recommendation Trends for THC
Check price target & stock forecast for Tenet here>>>
The ABR suggests buying Tenet, but making an investment decision solely on the basis of this information might not be a good idea. According to several studies, brokerage recommendations have little to no success guiding investors to choose stocks with the most potential for price appreciation.
Are you wondering why? The vested interest of brokerage firms in a stock they cover often results in a strong positive bias of their analysts in rating it. Our research shows that for every "Strong Sell" recommendation, brokerage firms assign five "Strong Buy" recommendations.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
Zacks Rank, our proprietary stock rating tool with an impressive externally audited track record, categorizes stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), and is an effective indicator of a stock's price performance in the near future. Therefore, using the ABR to validate the Zacks Rank could be an efficient way of making a profitable investment decision.
ABR Should Not Be Confused With Zacks RankAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
It has been and continues to be the case that analysts employed by brokerage firms are overly optimistic with their recommendations. Because of their employers' vested interests, these analysts issue more favorable ratings than their research would support, misguiding investors far more often than helping them.
On the other hand, earnings estimate revisions are at the core of the Zacks Rank. And empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
Another key difference between the ABR and Zacks Rank is freshness. The ABR is not necessarily up-to-date when you look at it. But, since brokerage analysts keep revising their earnings estimates to account for a company's changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in indicating future price movements.
Should You Invest in THC?Looking at the earnings estimate revisions for Tenet, the Zacks Consensus Estimate for the current year has increased 2% over the past month to $17.64.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Tenet. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Tenet may serve as a useful guide for investors.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.
Zacks Premium includes access to the Zacks Style Scores as well.
What are the Zacks Style Scores? Developed alongside the Zacks Rank, the Zacks Style Scores are a group of complementary indicators that help investors pick stocks with the best chances of beating the market over the next 30 days.
Each stock is assigned a rating of A, B, C, D, or F based on their value, growth, and momentum characteristics. Just like in school, an A is better than a B, a B is better than a C, and so on -- that means the better the score, the better chance the stock will outperform.
The Style Scores are broken down into four categories:
Value ScoreFor value investors, it's all about finding good stocks at good prices, and discovering which companies are trading under their true value before the broader market catches on. The Value Style Score utilizes ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to help pick out the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.
VGM ScoreIf you want a combination of all three Style Scores, then the VGM Score will be your friend. It rates each stock on their combined weighted styles, helping you find the companies with the most attractive value, best growth forecast, and most promising momentum. It's also one of the best indicators to use with the Zacks Rank.
How Style Scores Work with the Zacks Rank A proprietary stock-rating model, the Zacks Rank utilizes the power of earnings estimate revisions, or changes to a company's earnings outlook, to help investors create a successful portfolio.
Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Tenet Healthcare (THC - Free Report) Founded in 1967 and headquartered in Dallas, TX, Tenet Healthcare Corp., is an investor-owned health care services company, which owns and operates general hospitals and related health care facilities for urban and rural communities in numerous states, and has offices in California and Florida. The company has investments in other health care companies and is one of the largest investor-owned health care delivery systems in the United States.
THC is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
Momentum investors should take note of this Medical stock. THC has a Momentum Style Score of B, and shares are up 3.2% over the past four weeks.
Seven analysts revised their earnings estimate upwards in the last 60 days for fiscal 2026. The Zacks Consensus Estimate has increased $0.34 to $17.64 per share. THC boasts an average earnings surprise of +20.6%.
With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, THC should be on investors' short list.
Tenet Healthcare (THC - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Shares of this hospital operator have returned -2% over the past month versus the Zacks S&P 500 composite's +4.6% change. The Zacks Medical - Hospital industry, to which Tenet belongs, has lost 5.5% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Revisions to Earnings EstimatesHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Tenet is expected to post earnings of $4.15 per share, indicating a change of +3.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -2.1% over the last 30 days.
The consensus earnings estimate of $17.64 for the current fiscal year indicates a year-over-year change of +5.1%. This estimate has changed +2% over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $17.66 indicates a change of +0.1% from what Tenet is expected to report a year ago. Over the past month, the estimate has changed +1.4%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Tenet is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
In the case of Tenet, the consensus sales estimate of $5.41 billion for the current quarter points to a year-over-year change of +2.6%. The $22.02 billion and $22.37 billion estimates for the current and next fiscal years indicate changes of +3.4% and +1.6%, respectively.
Last Reported Results and Surprise HistoryTenet reported revenues of $5.37 billion in the last reported quarter, representing a year-over-year change of +2.8%. EPS of $4.82 for the same period compares with $4.36 a year ago.
Compared to the Zacks Consensus Estimate of $5.39 billion, the reported revenues represent a surprise of -0.36%. The EPS surprise was +14.49%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Tenet is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Bottom LineThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Tenet. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
On May 21, 2026, Tenet Healthcare Corp (THC) shares fell 5.0% to a current price of $178.00. This decline comes in the context of a 52-week range of $146.60 to
Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. However, it isn't easy to find a great growth stock.
In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.
However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.
Tenet Healthcare (THC - Free Report) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).
Here are three of the most important factors that make the stock of this hospital operator a great growth pick right now.
Earnings GrowthEarnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. And for growth investors, double-digit earnings growth is definitely preferable, and often an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Tenet is 24.8%, investors should actually focus on the projected growth. The company's EPS is expected to grow 5.3% this year, crushing the industry average, which calls for EPS growth of -10.2%.
Cash Flow GrowthCash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.
Right now, year-over-year cash flow growth for Tenet is 20.1%, which is higher than many of its peers. In fact, the rate compares to the industry average of 17.9%.
While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 11.5% over the past 3-5 years versus the industry average of 3.9%.
Promising Earnings Estimate RevisionsSuperiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
There have been upward revisions in current-year earnings estimates for Tenet. The Zacks Consensus Estimate for the current year has surged 2.2% over the past month.
Bottom LineTenet has not only earned a Growth Score of A based on a number of factors, including the ones discussed above, but it also carries a Zacks Rank #2 because of the positive earnings estimate revisions.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This combination positions Tenet well for outperformance, so growth investors may want to bet on it.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.
It also includes access to the Zacks Style Scores.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreValue investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.
Growth ScoreGrowth investors, on the other hand, are more concerned with a company's financial strength and health, and its future outlook. The Growth Style Score examines things like projected and historic earnings, sales, and cash flow to find stocks that will experience sustainable growth over time.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.
That's where the Style Scores come in.
You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only has a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.
Since the Scores were created to work together with the Zacks Rank, the direction of a stock's earnings estimate revisions should be a key factor when choosing which stocks to buy.
Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Tenet Healthcare (THC - Free Report) Founded in 1967 and headquartered in Dallas, TX, Tenet Healthcare Corp., is an investor-owned health care services company, which owns and operates general hospitals and related health care facilities for urban and rural communities in numerous states, and has offices in California and Florida. The company has investments in other health care companies and is one of the largest investor-owned health care delivery systems in the United States.
THC is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
It also boasts a Value Style Score of A thanks to attractive valuation metrics like a forward P/E ratio of 9.84; value investors should take notice.
For fiscal 2026, eight analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.37 to $17.67 per share. THC boasts an average earnings surprise of +20.6%.
With a solid Zacks Rank and top-tier Value and VGM Style Scores, THC should be on investors' short list.
For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.
The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.
Zacks Premium includes access to the Zacks Style Scores as well.
What are the Zacks Style Scores? The Zacks Style Scores, developed alongside the Zacks Rank, are complementary indicators that rate stocks based on three widely-followed investing methodologies; they also help investors pick stocks with the best chances of beating the market over the next 30 days.
Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.
The Style Scores are broken down into four categories:
Value ScoreFinding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and a host of other multiples to highlight the most attractive and discounted stocks.
Growth ScoreWhile good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.
Momentum ScoreMomentum investors, who live by the saying "the trend is your friend," are most interested in taking advantage of upward or downward trends in a stock's price or earnings outlook. Utilizing one-week price change and the monthly percentage change in earnings estimates, among other factors, the Momentum Style Score can help determine favorable times to buy high-momentum stocks.
VGM ScoreIf you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.
How Style Scores Work with the Zacks Rank The Zacks Rank, which is a proprietary stock-rating model, employs earnings estimate revisions, or changes to a company's earnings expectations, to make building a winning portfolio easier.
It's highly successful, with #1 (Strong Buy) stocks producing an unmatched +23.7% average annual return since 1988. That's more than double the S&P 500. But because of the large number of stocks we rate, there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.
This totals more than 800 top-rated stocks, and it can be overwhelming to try and pick the best stocks for you and your portfolio.
That's where the Style Scores come in.
To maximize your returns, you want to buy stocks with the highest probability of success. This means picking stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you find yourself looking at stocks with a #3 (Hold) rank, make sure they have Scores of A or B as well to ensure as much upside potential as possible.
As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.
For instance, a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one that boasts Scores of A and B, still has a downward-trending earnings forecast, and a much greater likelihood its share price will decline as well.
Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.
Stock to Watch: Tenet Healthcare (THC - Free Report) Founded in 1967 and headquartered in Dallas, TX, Tenet Healthcare Corp., is an investor-owned health care services company, which owns and operates general hospitals and related health care facilities for urban and rural communities in numerous states, and has offices in California and Florida. The company has investments in other health care companies and is one of the largest investor-owned health care delivery systems in the United States.
THC is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.
Additionally, the company could be a top pick for growth investors. THC has a Growth Style Score of A, forecasting year-over-year earnings growth of 5.3% for the current fiscal year.
For fiscal 2026, eight analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.37 to $17.67 per share. THC boasts an average earnings surprise of +20.6%.
With a solid Zacks Rank and top-tier Growth and VGM Style Scores, THC should be on investors' short list.
Tenet Healthcare Corporation remains a compelling Buy, supported by strong financial performance and deeply discounted valuation versus peers. Despite a recent 22.7% stock decline and regulatory headwinds, THC's Ambulatory Care segment shows resilience, with revenue up from $1.19B to $1.32B and profit growth. Management guides for 2026 revenue of $21.5B–$22.3B, EBITDA of $4.485B–$4.785B, and adjusted net profits of $1.425B–$1.625B.
Tenet Healthcare (THC - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Shares of this hospital operator have returned -15.3% over the past month versus the Zacks S&P 500 composite's +4.6% change. The Zacks Medical - Hospital industry, to which Tenet belongs, has lost 10.7% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
We essentially look at how sell-side analysts covering the stock are revising their earnings estimates to reflect the impact of the latest business trends. And if earnings estimates go up for a company, the fair value for its stock goes up. A higher fair value than the current market price drives investors' interest in buying the stock, leading to its price moving higher. This is why empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For the current quarter, Tenet is expected to post earnings of $4.08 per share, indicating a change of +1.5% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.6% over the last 30 days.
For the current fiscal year, the consensus earnings estimate of $17.61 points to a change of +5% from the prior year. Over the last 30 days, this estimate has changed +0.6%.
For the next fiscal year, the consensus earnings estimate of $17.63 indicates a change of +0.2% from what Tenet is expected to report a year ago. Over the past month, the estimate has changed +0.5%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Tenet is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue GrowthWhile earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
For Tenet, the consensus sales estimate for the current quarter of $5.39 billion indicates a year-over-year change of +2.3%. For the current and next fiscal years, $22.02 billion and $22.43 billion estimates indicate +3.3% and +1.9% changes, respectively.
Last Reported Results and Surprise HistoryTenet reported revenues of $5.37 billion in the last reported quarter, representing a year-over-year change of +2.8%. EPS of $4.82 for the same period compares with $4.36 a year ago.
Compared to the Zacks Consensus Estimate of $5.39 billion, the reported revenues represent a surprise of -0.36%. The EPS surprise was +14.49%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Tenet is graded A on this front, indicating that it is trading at a discount to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Tenet. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
In the latest trading session, Tenet Healthcare (THC - Free Report) closed at $161.37, marking a -2.11% move from the previous day. This change lagged the S&P 500's 0.41% gain on the day. On the other hand, the Dow registered a gain of 1.73%, and the technology-centric Nasdaq decreased by 0.09%.
Shares of the hospital operator have depreciated by 15.25% over the course of the past month, underperforming the Medical sector's gain of 0.14%, and the S&P 500's gain of 4.59%.
Market participants will be closely following the financial results of Tenet Healthcare in its upcoming release. The company is forecasted to report an EPS of $4.08, showcasing a 1.49% upward movement from the corresponding quarter of the prior year. In the meantime, our current consensus estimate forecasts the revenue to be $5.39 billion, indicating a 2.27% growth compared to the corresponding quarter of the prior year.
For the annual period, the Zacks Consensus Estimates anticipate earnings of $17.61 per share and a revenue of $22.02 billion, signifying shifts of +4.95% and +3.32%, respectively, from the last year.
It is also important to note the recent changes to analyst estimates for Tenet Healthcare. These latest adjustments often mirror the shifting dynamics of short-term business patterns. As such, positive estimate revisions reflect analyst optimism about the business and profitability.
Our research suggests that these changes in estimates have a direct relationship with upcoming stock price performance. To take advantage of this, we've established the Zacks Rank, an exclusive model that considers these estimated changes and delivers an operational rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.6% higher within the past month. Tenet Healthcare currently has a Zacks Rank of #3 (Hold).
Investors should also note Tenet Healthcare's current valuation metrics, including its Forward P/E ratio of 9.36. This signifies no noticeable deviation in comparison to the average Forward P/E of 9.36 for its industry.
Meanwhile, THC's PEG ratio is currently 1.09. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. As the market closed yesterday, the Medical - Hospital industry was having an average PEG ratio of 1.09.
The Medical - Hospital industry is part of the Medical sector. This industry currently has a Zacks Industry Rank of 115, which puts it in the top 48% of all 250+ industries.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Remember to apply Zacks.com to follow these and more stock-moving metrics during the upcoming trading sessions.
When deciding whether to buy, sell, or hold a stock, investors often rely on analyst recommendations. Media reports about rating changes by these brokerage-firm-employed (or sell-side) analysts often influence a stock's price, but are they really important?
Before we discuss the reliability of brokerage recommendations and how to use them to your advantage, let's see what these Wall Street heavyweights think about Tenet Healthcare (THC - Free Report) .
Tenet currently has an average brokerage recommendation (ABR) of 1.39, on a scale of 1 to 5 (Strong Buy to Strong Sell), calculated based on the actual recommendations (Buy, Hold, Sell, etc.) made by 22 brokerage firms. An ABR of 1.39 approximates between Strong Buy and Buy.
Of the 22 recommendations that derive the current ABR, 16 are Strong Buy and three are Buy. Strong Buy and Buy respectively account for 72.7% and 13.6% of all recommendations.
Brokerage Recommendation Trends for THC
Check price target & stock forecast for Tenet here>>>
While the ABR calls for buying Tenet, it may not be wise to make an investment decision solely based on this information. Several studies have shown limited to no success of brokerage recommendations in guiding investors to pick stocks with the best price increase potential.
Do you wonder why? As a result of the vested interest of brokerage firms in a stock they cover, their analysts tend to rate it with a strong positive bias. According to our research, brokerage firms assign five "Strong Buy" recommendations for every "Strong Sell" recommendation.
This means that the interests of these institutions are not always aligned with those of retail investors, giving little insight into the direction of a stock's future price movement. It would therefore be best to use this information to validate your own analysis or a tool that has proven to be highly effective at predicting stock price movements.
With an impressive externally audited track record, our proprietary stock rating tool, the Zacks Rank, which classifies stocks into five groups, ranging from Zacks Rank #1 (Strong Buy) to Zacks Rank #5 (Strong Sell), is a reliable indicator of a stock's near-term price performance. So, validating the Zacks Rank with ABR could go a long way in making a profitable investment decision.
Zacks Rank Should Not Be Confused With ABRAlthough both Zacks Rank and ABR are displayed in a range of 1--5, they are different measures altogether.
Broker recommendations are the sole basis for calculating the ABR, which is typically displayed in decimals (such as 1.28). The Zacks Rank, on the other hand, is a quantitative model designed to harness the power of earnings estimate revisions. It is displayed in whole numbers -- 1 to 5.
Analysts employed by brokerage firms have been and continue to be overly optimistic with their recommendations. Since the ratings issued by these analysts are more favorable than their research would support because of the vested interest of their employers, they mislead investors far more often than they guide.
In contrast, the Zacks Rank is driven by earnings estimate revisions. And near-term stock price movements are strongly correlated with trends in earnings estimate revisions, according to empirical research.
Furthermore, the different grades of the Zacks Rank are applied proportionately across all stocks for which brokerage analysts provide earnings estimates for the current year. In other words, at all times, this tool maintains a balance among the five ranks it assigns.
There is also a key difference between the ABR and Zacks Rank when it comes to freshness. When you look at the ABR, it may not be up-to-date. Nonetheless, since brokerage analysts constantly revise their earnings estimates to reflect changing business trends, and their actions get reflected in the Zacks Rank quickly enough, it is always timely in predicting future stock prices.
Is THC Worth Investing In?Looking at the earnings estimate revisions for Tenet, the Zacks Consensus Estimate for the current year has increased 0.7% over the past month to $17.61.
Analysts' growing optimism over the company's earnings prospects, as indicated by strong agreement among them in revising EPS estimates higher, could be a legitimate reason for the stock to soar in the near term.
The size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, has resulted in a Zacks Rank #2 (Buy) for Tenet. You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
Therefore, the Buy-equivalent ABR for Tenet may serve as a useful guide for investors.
Investors seek growth stocks to capitalize on above-average growth in financials that help these securities grab the market's attention and produce exceptional returns. But finding a growth stock that can live up to its true potential can be a tough task.
In addition to volatility, these stocks carry above-average risk by their very nature. Also, one could end up losing from a stock whose growth story is actually over or nearing its end.
However, the task of finding cutting-edge growth stocks is made easy with the help of the Zacks Growth Style Score (part of the Zacks Style Scores system), which looks beyond the traditional growth attributes to analyze a company's real growth prospects.
Tenet Healthcare (THC - Free Report) is one such stock that our proprietary system currently recommends. The company not only has a favorable Growth Score, but also carries a top Zacks Rank.
Studies have shown that stocks with the best growth features consistently outperform the market. And returns are even better for stocks that possess the combination of a Growth Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 (Buy).
While there are numerous reasons why the stock of this hospital operator is a great growth pick right now, we have highlighted three of the most important factors below:
Earnings GrowthEarnings growth is arguably the most important factor, as stocks exhibiting exceptionally surging profit levels tend to attract the attention of most investors. For growth investors, double-digit earnings growth is highly preferable, as it is often perceived as an indication of strong prospects (and stock price gains) for the company under consideration.
While the historical EPS growth rate for Tenet is 24.8%, investors should actually focus on the projected growth. The company's EPS is expected to grow 4.9% this year, crushing the industry average, which calls for EPS growth of -10.1%.
Cash Flow GrowthCash is the lifeblood of any business, but higher-than-average cash flow growth is more beneficial and important for growth-oriented companies than for mature companies. That's because, high cash accumulation enables these companies to undertake new projects without raising expensive outside funds.
Right now, year-over-year cash flow growth for Tenet is 20.1%, which is higher than many of its peers. In fact, the rate compares to the industry average of 17.9%.
While investors should actually consider the current cash flow growth, it's worth taking a look at the historical rate too for putting the current reading into proper perspective. The company's annualized cash flow growth rate has been 11.5% over the past 3-5 years versus the industry average of 3.9%.
Promising Earnings Estimate RevisionsSuperiority of a stock in terms of the metrics outlined above can be further validated by looking at the trend in earnings estimate revisions. A positive trend is of course favorable here. Empirical research shows that there is a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
The current-year earnings estimates for Tenet have been revising upward. The Zacks Consensus Estimate for the current year has surged 0.7% over the past month.
Bottom LineWhile the overall earnings estimate revisions have made Tenet a Zacks Rank #2 stock, it has earned itself a Growth Score of A based on a number of factors, including the ones discussed above.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
This combination indicates that Tenet is a potential outperformer and a solid choice for growth investors.
Investors looking for stocks in the Manufacturing - Electronics sector might want to consider either EnerSys (ENS - Free Report) or Eaton (ETN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, EnerSys is sporting a Zacks Rank of #2 (Buy), while Eaton has a Zacks Rank of #3 (Hold). This means that ENS's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ENS currently has a forward P/E ratio of 17.87, while ETN has a forward P/E of 28.49. We also note that ENS has a PEG ratio of 1.19. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. ETN currently has a PEG ratio of 2.44.
Another notable valuation metric for ENS is its P/B ratio of 4.17. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, ETN has a P/B of 7.46.
These metrics, and several others, help ENS earn a Value grade of B, while ETN has been given a Value grade of D.
ENS is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that ENS is likely the superior value option right now.
ETN trades above its 200-day SMA as backlog jumps and AI data-center demand boosts growth, yet a premium valuation may warrant waiting for a better entry.
The biggest growth stories in the market right now aren't happening with the chip makers. They're happening one layer beneath them.
Keith Kaplan, CEO of TradeSmith, has spent recent months mapping what he calls the "choke points" of the AI build-out—the physical bottlenecks where trillion-dollar demand is running into a world that can't supply fast enough. His argument: the largest fortunes of this AI cycle won't go to the visible players. They'll go to the companies that those players can't function without.
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The $700 Billion ProblemBy the end of 2025, the four largest U.S. hyperscalers—Microsoft NASDAQ: MSFT, Alphabet NASDAQ: GOOGL, Amazon NASDAQ: AMZN, and Meta Platforms NASDAQ: META—are expected to spend more than $700 billion on AI infrastructure. That number climbs toward $1 trillion by 2027 and, according to projections shared by NVIDIA NASDAQ: NVDA during its most recent earnings call, could reach $3 to $4 trillion in total economic impact within three to five years.
That money isn't going into software. It's going into football-field-sized buildings, gigawatt-scale power systems, and transmission lines that don't exist yet. Think of it as demand being squeezed through a very narrow pipe: no matter how much water is upstream, the flow is whatever the choke point allows.
Kaplan identifies five of those choke points, and a stock for each.
Memory: The Chip Inside the ChipHigh-bandwidth memory (HBM) is what allows a GPU to actually function.
Micron Technology Today
MU
Micron Technology
$993.67 -2.20 (-0.22%)
As of 10:27 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$103.38▼
$1,089.29Dividend Yield0.06%
P/E Ratio46.85
Price Target$737.63
Without it, AI chips don't work. Micron Technology NASDAQ: MU is the only American producer of HBM, and its output for 2025 was completely sold out before the year began. Capacity for 2026 is already largely committed.
As NVIDIA transitions its Rubin chips from HBM3E to HBM4, Micron's position in the supply chain only strengthens. Annual revenue is tracking toward $58 billion, and net income is already at $24 billion. Kaplan sees this as a three-to-five-year hold, with the next earnings report on June 24 as an early signal of where demand is heading.
Photonics: The Speed of Light Between ChipsCoherent Today
$382.67 +19.09 (+5.25%)
As of 10:27 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$76.88▼
$440.00P/E Ratio182.93
Price Target$379.64
When data leaves one chip, it has to communicate with thousands of others, and copper wire can't keep up. The solution is silicon photonics: light passed through fiber at speeds copper simply can't match.
Coherent Corp. NYSE: COHR is the leading supplier of the optical transceivers that make this happen, converting electrical signals into pulses of light and back again at every connection in an AI cluster. NVIDIA took a $2 billion stake in Coherent earlier this year—a signal, Kaplan argues, of just how central the company is to the next phase of AI build-out.
Thermal Management: Keeping It From MeltingTop-end AI chips now draw up to 1,200 watts each.
Vertiv Today
$300.36 +2.48 (+0.83%)
As of 10:27 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$110.06▼
$379.93Dividend Yield0.08%
P/E Ratio75.26
Price Target$326.39
Put 72 of them in a rack, and you've got the heat output of a small apartment in a space about the size of a refrigerator. Air cooling can't handle it. Direct-to-chip liquid cooling can carry heat 3,500 times more efficiently than air at the same flow rate.
Vertiv Holdings NYSE: VRT already supplies most of the large hyperscaler build-outs with its cooling distribution units. With a market cap above $100 billion and annual revenue over $10 billion, it's not a speculative name—and a recent pullback of more than 10% over the week before Memorial Day is what Kaplan would view as an attractive entry point ahead of its July 29 earnings.
Power Generation: Nuclear Is Back OnlineConstellation Energy Today
CEG
Constellation Energy
$250.85 +4.14 (+1.68%)
As of 10:27 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$240.51▼
$412.70Dividend Yield0.68%
P/E Ratio21.81
Price Target$377.40
A single AI data center now consumes the power of a mid-sized city. Meta's Hyperion facility is currently operating at 2 gigawatts and is expected to scale to 5. Meeting that kind of baseload demand 24 hours a day, seven days a week means natural gas and nuclear. Both are booming.
Constellation Energy NASDAQ: CEG is the largest nuclear operator in the U.S., with 21 reactors and a 20-year deal signed with Microsoft in September 2024 to bring Three Mile Island back online. Constellation is investing $1.6 billion to revive the plant and deliver 835 megawatts of dedicated capacity.
The shift in who's buying nuclear power tells the story: a decade ago, the biggest buyers were utilities. Today, they're software companies. Amazon's 17-year, $18 billion power purchase agreement with Talen Energy NASDAQ: TLN underscores just how aggressively Big Tech is moving to lock up baseload supply.
The stock is flat over the past three months, a consolidation Kaplan views as a setup ahead of early August earnings, not a sign the thesis has broken.
The Grid: The Last Mile That Takes the LongestEaton Today
$393.65 +0.01 (+0.00%)
As of 10:27 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$311.92▼
$435.43Dividend Yield1.12%
P/E Ratio38.47
Price Target$420.95
Even after the power plant is built, getting electricity to the data center can take years. Transformer lead times have stretched from 12 months to two and a half years. Heavy gas turbines are running up to seven years out. In some northern Virginia utility territories, grid hookups for projects filed after 2024 won't be available until at least 2028.
Eaton Corporation NYSE: ETN has been solving exactly this problem for more than 100 years. Transformers, switchgear, power distribution—the infrastructure that connects every data center to the actual grid.
Data centers are now Eaton's fastest-growing end market, and the company is sitting on multi-year backlogs with a $148 billion market cap and nearly $30 billion in annual revenue. The stock has been largely flat for the past three months, which Kaplan reads as quiet accumulation. Next earnings: August 4.
A 5-Year Mega Trend Still in Its Early InningsMemory spend as a share of hyperscaler budgets has shifted from 8% to 30% in just two years. U.S. data centers could account for 17% of all national electricity consumption by 2030, up from 4% today. These aren't projections being whispered—they're numbers already reshaping capital allocation across the economy.
The question most investors are asking is whether they've missed it. Kaplan's view: not even close. The stocks may be up, but the infrastructure hasn't been built yet. That gap is exactly where the opportunity lives.
Should You Invest $1,000 in Micron Technology Right Now?Before you consider Micron Technology, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Micron Technology wasn't on the list.
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Eaton (ETN - Free Report) has recently been on Zacks.com's list of the most searched stocks. Therefore, you might want to consider some of the key factors that could influence the stock's performance in the near future.
Over the past month, shares of this power management company have returned -1.1%, compared to the Zacks S&P 500 composite's +5.1% change. During this period, the Zacks Manufacturing - Electronics industry, which Eaton falls in, has lost 1.4%. The key question now is: What could be the stock's future direction?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Earnings Estimate RevisionsHere at Zacks, we prioritize appraising the change in the projection of a company's future earnings over anything else. That's because we believe the present value of its future stream of earnings is what determines the fair value for its stock.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
Eaton is expected to post earnings of $3.07 per share for the current quarter, representing a year-over-year change of +4.1%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.2%.
For the current fiscal year, the consensus earnings estimate of $13.32 points to a change of +10.4% from the prior year. Over the last 30 days, this estimate has changed +0.2%.
For the next fiscal year, the consensus earnings estimate of $15.61 indicates a change of +17.2% from what Eaton is expected to report a year ago. Over the past month, the estimate has changed +2%.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Eaton is rated Zacks Rank #3 (Hold).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Revenue Growth ForecastEven though a company's earnings growth is arguably the best indicator of its financial health, nothing much happens if it cannot raise its revenues. It's almost impossible for a company to grow its earnings without growing its revenue for long periods. Therefore, knowing a company's potential revenue growth is crucial.
For Eaton, the consensus sales estimate for the current quarter of $8 billion indicates a year-over-year change of +13.9%. For the current and next fiscal years, $31.64 billion and $34.89 billion estimates indicate +15.3% and +10.3% changes, respectively.
Last Reported Results and Surprise HistoryEaton reported revenues of $7.45 billion in the last reported quarter, representing a year-over-year change of +16.8%. EPS of $2.81 for the same period compares with $2.72 a year ago.
Compared to the Zacks Consensus Estimate of $7.09 billion, the reported revenues represent a surprise of +5.16%. The EPS surprise was +2.55%.
Over the last four quarters, Eaton surpassed consensus EPS estimates three times. The company topped consensus revenue estimates two times over this period.
ValuationNo investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
Comparing the current value of a company's valuation multiples, such as its price-to-earnings (P/E), price-to-sales (P/S), and price-to-cash flow (P/CF), to its own historical values helps ascertain whether its stock is fairly valued, overvalued, or undervalued, whereas comparing the company relative to its peers on these parameters gives a good sense of how reasonable its stock price is.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an A is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Eaton is graded D on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
ConclusionThe facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Eaton. However, its Zacks Rank #3 does suggest that it may perform in line with the broader market in the near term.
BOSTON--(BUSINESS WIRE)--The Eaton Vance closed-end funds listed below released today the estimated sources of their May distributions (each a “Fund”). This press release is issued as required by the Funds' managed distribution plan (Plan) and an exemptive order received from the U.S. Securities and Exchange Commission. The Board of Trustees has approved the implementation of the Plan to make monthly, as noted below, cash distributions to common shareholders, stated in terms of a fixed amount p.
BOSTON--(BUSINESS WIRE)--The following Eaton Vance closed-end funds (the “Funds”) announced distributions today as detailed below. Declaration – 6/1/2026 Ex-Date – 6/12/2026 Record – 6/12/2026 Payable – 6/24/2026 Municipal Bond Funds: Fund Ticker Distribution Change From Prior Distribution Closing Market Price – 05/29/26 Distribution Rate at Market Price Eaton Vance California Municipal Income Trust CEV $0.0500 - $10.34 5.80% Eaton Vance Municipal Income Trust EVN $0.0513 - $10.75 5.73% T.
BOSTON--(BUSINESS WIRE)--Eaton Vance Limited Duration Income Fund (NYSE American: EVV), Eaton Vance Senior Floating-Rate Trust (NYSE: EFR), and Eaton Vance Senior Income Trust (NYSE: EVF) (each a “Fund,” and together, the “Funds”) announced the final results of their respective voluntary tender offers (each, a “Tender Offer” and together, the “Tender Offers”) for up to 100% of such Fund's outstanding auction preferred shares (“APS”) at a price per share equal to 98% of the APS liquidation prefe.
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Editor’s Note: a prior version of this article incorrectly stated the Eaton acquisition of Boyd Thermal was pending when the acquisition closed in March. This article has been reflected to reflect this information.
Everyone wants to own NVIDIA (NASDAQ:NVDA | NVDA Price Prediction). Almost nobody talks about who pours the concrete, runs the wires, and keeps the chips from melting. That’s where we’ve been spending most of our research time over the past 18 months, and three names keep surfacing: Eaton, Vertiv, and Quanta Services.
Here’s the setup. AI hyperscalers are now standing up gigawatt-scale clusters in under six months, deploying on-site power generation, direct-to-chip cooling, and behind-the-meter natural gas plants. Data centers could hit between 6.7% and 12% of total U.S. electricity consumption by 2028. You cannot serve a token without a transformer.
Eaton: The Switchgear Behind the Racks Eaton (NYSE:ETN) is the power management backbone. Q4 2025 Electrical Americas hit record quarterly sales of $3.51 billion, up 21% with 29% backlog growth. The recent $9.5 billion Boyd Thermal acquisition drops liquid cooling directly into the portfolio. CEO Paulo Ruiz said, “Our growing and diversified backlog provides us with extended visibility, enabling predictable financial performance and disciplined capital planning.”
Shares are up 26% YTD, trading at a forward P/E of 30. You’d want Eaton if you believe AI buildout has years to run; if you think hyperscaler capex peaks in 2026, the multiple gets harder.
Vertiv: The Cooling Bottleneck Vertiv (NYSE:VRT) owns thermal management at hyperscale. Q4 2025 organic orders surged 252% year-over-year, the strongest order quarter in company history, with backlog hitting $15.0 billion. Q1 2026 delivered 44% organic Americas growth and a 16% EPS beat.
CEO Giordano Albertazzi said, “As infrastructure density increases and deployment timelines compress, we’re positioned to be the partner customers need to bring their most ambitious projects to life, at scale.” The stock is up 95% YTD and now trades at a forward P/E of 51. Premium price for premium positioning.
Quanta Services: The Grid Itself Quanta Services (NYSE:PWR) builds the grid that feeds everything. Q1 2026 revenue jumped 26.3% to $7.87 billion with a record $48.47 billion backlog. CEO Duke Austin pointed to a $2.4 trillion total addressable market through 2030 across utility, generation, and large-load convergence.
Shares are up 69% YTD. Austin said, “Quanta’s craft-labor platform, integrated solutions and supply chain investments position us as the trusted partner our customers turn to when certainty matters most.” Skilled labor is the real moat. You cannot import linemen.
The Trade I’ve watched industrials get dismissed as boring for 15 years. The chips get the headlines, but the megawatts get the bottleneck. Eaton, Vertiv, and Quanta all raised 2026 guidance, all carry record backlogs, and all sit upstream of every GPU shipment. If the AI buildout slows, these multiples compress fast. If it doesn’t, the boring stuff keeps quietly winning.
A month has gone by since the last earnings report for Eaton (ETN - Free Report) . Shares have lost about 0% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Eaton due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Eaton's Q1 Earnings and Revenues Surpass Estimates, Guidance Raised
Eaton Corporation reported first-quarter 2026 earnings of $2.81 per share, which surpassed the Zacks Consensus Estimate of $2.74 by 2.6%. Earnings per share during the quarter were up 3.3% year over year. The figure was within the company’s guidance of $2.65-$2.85.
GAAP earnings for the reported quarter were $2.22 per share, down 9.4% from $2.45 in the year-ago quarter. The difference between GAAP and operating earnings in the reported quarter was due to charges of 29 cents for intangible assets amortization, 8 cents for the multi-year restructuring program and 22 cents related to acquisitions and divestitures.
Eaton’s Q1 RevenuesTotal quarterly revenues were $7.45 billion, which improved 16.9% from the year-ago period. The year-over-year growth in sales was due to 10% increase in organic sales, 4% increase from contributions from acquired assets and 3% growth from foreign exchange. Quarterly revenues surpassed the Zacks Consensus Estimate of $7.1 billion by 5.2%.
ETN’s Segmental DetailsElectrical Americas’ total first-quarter sales were $3.6 billion, up 20% year over year. The rise was due to 14% increase in organic sales, 5% growth from acquired assets and 1% growth from foreign exchange. Operating profit was $0.92 billion, up 2% year over year.
Electrical Global’s total sales were $1.94 billion, up 21% from the year-ago quarter. The year-over-year growth was due to an increase in organic sales by 9%. Acquisition and positive currency translation added 6% each. Operating profit was $373 million, up 24% year over year.
Aerospace’s total sales were $1.14 billion, up 16% year over year. The metric was driven by organic growth of 9%, acquisition 5% and positive currency translation of 2%. Operating profit was $304 million, up 35% year over year.
Vehicle’s total sales were $586 million, down 9% year over year, due to a 13% decline in organic sales, offset by 4% increase from positive currency translation. Operating profit was $96 million, down 21% year over year.
Mobility segment’s total sales were $766 million, down 2% year over year, caused by a 6% decline in organic sales, partially offset by positive currency translation of 4%. Operating income was $89 million compared with $91 million in the year-ago quarter.
Highlights of ETN’s Q1 ReleaseSelling and administrative expenses were $1.27 billion, up 21.1% year over year.
Research and development expenses were $211 million, up 6.6% from the year-ago quarter’s level.
Interest expenses were $106 million, up 221.2% year over year.
Eaton’s backlog, at the end of first-quarter 2026, increased 44% in Electrical Americas, 26% in Aerospace and 73% in Electric Global on a rolling 12-month basis.
In the first quarter, the company also closed $11 billion of value-enhancing strategic acquisitions. The strategic acquisitions in high-growth, high-margin markets support long-term value creation.
Financial Update of ETNAs of March 31, 2026, cash was $565 million compared with $622 million as of Dec. 31, 2025.
Long-term debt was $565 million as of March 31, 2026, compared with $622 million as of Dec. 31, 2025.
ETN’s long-term debt was $18.53 billion as of March 31, 2026, up from $8.75 billion as of Dec. 31, 2025.
Guidance of EatonEaton’s second-quarter 2026 earnings are expected in the range of $3-$3.10 per share. The company expects organic growth in the range of 9-11%.
Eaton raised its adjusted earnings per share in the range of$13.05-$13.50 for 2026, up from the previous guidance of $13-$13.50. The company anticipates organic sales growth for 2026 in the range of 9-11%. Eaton expects its segment margin to be in the range of 24.1-24.5%.
How Have Estimates Been Moving Since Then?Since the earnings release, investors have witnessed a downward trend in estimates review.
VGM ScoresAt this time, Eaton has a average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
OutlookEstimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Eaton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Key Takeaways ETN shares are up 32.2% YTD, outpacing its industry, sector and the S&P 500 composite.Eaton guides 2026 adjusted EPS of $13.05-$13.50 and organic revenue growth of 9%-11%.ETN targets $5.0-$5.4B operating cash flow in 2026 and has raised dividends five times in five years. Shares of Eaton Corporation (ETN - Free Report) have gained 32.2% year to date, outperforming the industry, its sector, as well as the Zacks S&P 500 composite in the same time frame. ETN shares are trading at a discount to their 52-week high.
This diversified power management company and a global technology leader in electrical components and systems is gaining from rising electrification and data center demand.
ETN vs Industry, Sector, S&P 500 YTD
Image Source: Zacks Investment Research
Emerson Electric Co. (EMR - Free Report) and Powell Industries (POWL - Free Report) , both industrial tech stocks, have gained 6.1% and 182.1%, respectively, year to date.
Should you consider adding ETN stock to your portfolio based on positive price movement only? Let’s delve deeper and find out the factors that can help investors decide whether it is a good time to add ETN stock to their portfolio.
What’s Driving Eaton?As a diversified power management company, Eaton is well-positioned to capitalize on long-term growth trends, including grid modernization, data center expansion, industrial automation, energy transition and the recovery in aerospace markets. The company’s growing backlog highlights sustained customer demand and reflects its ability to deliver high-quality, mission-critical products.
Eaton has also established a clear long-term growth strategy centered on innovation and sustainability. The company plans to invest approximately $3 billion in research and development over the next decade to advance sustainable and technologically sophisticated solutions. These investments are aimed at addressing evolving customer requirements, enhancing existing product offerings and reinforcing Eaton’s competitive positioning across its global end markets.
In addition, Eaton continues to strengthen its market presence through strategic acquisitions. In the first quarter, the company completed nearly $11 billion of acquisitions designed to expand its exposure to high-growth and high-margin markets. These acquisitions are expected to enhance Eaton’s long-term growth profile and support durable value creation.
The rapid expansion of AI-driven data centers, which require significantly higher power capacity and energy density, presents a major opportunity for Eaton. The company is increasing its participation across the electrical power value chain while benefiting from robust demand in data center and utility markets, as well as continued momentum in commercial aerospace and defense. Eaton’s diversified business model, spanning commercial, industrial, utility, aerospace, and residential end markets, also reduces reliance on any single customer segment or industry.
Furthermore, Eaton remains focused on driving operational efficiency and margin expansion through portfolio optimization, productivity initiatives and disciplined execution of strategic acquisitions.
Encouraging Estimates for EatonEaton now expects adjusted earnings per share in the range of $13.05-$13.50 for 2026 and organic revenue growth in the band of 9-11% in 2026.
The Zacks Consensus Estimate for 2026 and 2027 revenues indicates a 15.3% and 10.3% year-over-year increase, respectively. The same for 2026 and 2027 earnings implies a 10.4% and a 17.2% year-over-year increase, respectively. The expected long-term earnings growth rate is pegged at 11.7%.
Image Source: Zacks Investment Research
Optimistic Analyst SentimentThe Zacks Consensus Estimate for ETN’s 2026 and 2027 earnings per share has moved up 0.2% and 2%, respectively, in the past 30 days.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Emerson’s 2026 earnings per share has moved down but that for 2027 has witnessed no movement in the past 30 days.
The Zacks Consensus Estimate for Powell’s 2026 earnings per share has moved down but that for 2027 has moved up in the past 30 days.
Eaton’s Return on Equity Is Better Than the IndustryReturn on equity (“ROE”) is a financial ratio that measures how well a company uses its shareholders’ equity to generate profits. The current ROE of the company indicates that it is using shareholders’ funds more efficiently than its peers.
Eaton’s trailing 12-month return on equity is 24.72%, ahead of the industry average of 20.35%.
ETN’s Prudent Capital DeploymentEaton continues to balance growth investments with cash generation. Management expects operating cash flow of $5.0-$5.4 billion and free cash flow of $3.9-$4.3 billion in 2026 that supports continued reinvestment and shareholder returns over time.
ETN’s management has raised dividends five times in the past five years. The current annual dividend is $4.40 per share, reflecting a dividend yield of 1.18%, which is better than its industry’s yield of 0.48%.
Is Eaton’s Stock Expensive?Eaton’s shares are trading at a premium compared with its industry. The company’s forward 12-month price to earnings of 29.47X is higher than its industry’s 24.65X and above the median of 26.34X over the last three years.
Image Source: Zacks Investment Research
Eaton shares are more expensive than Emerson Electric but cheaper than Powell.
Parting ThoughtsEaton continues to deliver strong performance across its core businesses while benefiting from rising demand tied to data center expansion. The company’s continued focus on research and development is supporting innovation, improving its product portfolio, and enabling it to better meet changing customer requirements. Additionally, strategic acquisitions are enhancing Eaton’s capabilities, broadening its product offerings, and increasing its reach across attractive growth markets.
The company remains appealing due to favorable earnings estimate revisions, solid ROI and an expanding backlog that underscores healthy demand trends. Nevertheless, given the stock’s premium valuation, investors may prefer to wait for a more attractive entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Takeaways CAT shares have been standout performers in 2026. Power demands have led to record-breaking results from the Dividend Aristocrat.VRT and ETN also reflect dividend-paying stocks benefiting from the data center buildout. Caterpillar (CAT - Free Report) shares continue to deliver a stellar performance in 2026, up more than 60% and widely outperforming the S&P 500. The stock represents a clear favorite for gaining exposure to the artificial intelligence (AI) buildout given the performance, with its consistent dividend payouts over time making it attractive to investors with an appetite for income.
In fact, the company is a member of the elite Dividend Aristocrats group, owing to its shareholder-friendly nature.
Data Center Trends Power CAT SharesCaterpillar posted robust results in its latest release, continuing a streak of impressive numbers over the past year or so on the back of growing demand. Sales of $17.4 billion grew by an impressive 22% YoY, with its backlog also reflecting a company record.
Its Power and Energy segment in the above-mentioned quarter helped drive the strong results, with sales of $7.0 billion climbing more than 20% year-over-year thanks to higher demand for power products used in data center applications, primarily large reciprocating engines.
Specifically in Power Generation applications, sales grew by 41% year-over-year, underscoring its favorable position in data center applications. Below is a chart illustrating the company’s YoY quarterly sales growth rates, with clear acceleration evident over recent periods.
Image Source: Zacks Investment Research
The outsized sales growth has helped keep shares near all-time highs, with Caterpillar’s shareholder-friendly nature also a major positive, as it deployed $5.7 billion in cash for share repurchases and dividend payouts throughout the period.
Sales revisions for its current and next fiscal years remain bullish, driven by a strong demand environment.
Image Source: Zacks Investment Research
Unsurprisingly, EPS revisions for its current and next fiscal years also reflect the same bullish trend.
Image Source: Zacks Investment Research
The stock has undeniably gotten more expensive, with the current 34.1X forward 12-month earnings multiple well above the 16.4X five-year median. But the accelerating earnings growth helps support the richer multiple, with current Zacks Consensus estimates suggesting 30% EPS growth in its current FY26 and 24% in FY27.
Bottom Line
Caterpillar (CAT - Free Report) has emerged as a strong AI infrastructure play, particularly on the power side. Red-hot demand pictures stemming from the buildout have led to record-breaking quarterly results, with shares benefiting in a big way. It’s reasonable to expect continued momentum as companies scramble to secure power products for their data centers, a trend that appears set to continue for at least a few years.
Caterpillar isn’t the only stock with notable AI exposure that pays investors, with Vertiv (VRT - Free Report) and Eaton (ETN - Free Report) also on the list. Both Vertiv and Eaton have similarly had strong runs in 2026 thanks to their role in the buildout, seeing immense growth in their backlogs as well.
Analysts have bullishly raised their sales expectations for Vertiv for both its current and next fiscal years, underpinning the favorable demand outlook.
Image Source: Zacks Investment Research
The same can be said for Eaton, who is also enjoying positive sales revisions across the same timeframes.
Eaton (ETN - Free Report) closed the most recent trading day at $375.46, moving -6.54% from the previous trading session. The stock's performance was behind the S&P 500's daily loss of 1.62%. On the other hand, the Dow registered a loss of 1.87%, and the technology-centric Nasdaq decreased by 1.98%.
The power management company's shares have seen an increase of 0.05% over the last month, not keeping up with the Industrial Products sector's gain of 0.72% and outstripping the S&P 500's loss of 0.03%.
Market participants will be closely following the financial results of Eaton in its upcoming release. The company's earnings per share (EPS) are projected to be $3.07, reflecting a 4.07% increase from the same quarter last year. In the meantime, our current consensus estimate forecasts the revenue to be $8 billion, indicating a 13.88% growth compared to the corresponding quarter of the prior year.
For the entire fiscal year, the Zacks Consensus Estimates are projecting earnings of $13.32 per share and a revenue of $31.64 billion, representing changes of +10.36% and +15.27%, respectively, from the prior year.
Investors might also notice recent changes to analyst estimates for Eaton. Such recent modifications usually signify the changing landscape of near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the business outlook.
Our research demonstrates that these adjustments in estimates directly associate with imminent stock price performance. To capitalize on this, we've crafted the Zacks Rank, a unique model that incorporates these estimate changes and offers a practical rating system.
The Zacks Rank system, ranging from #1 (Strong Buy) to #5 (Strong Sell), possesses a remarkable history of outdoing, externally audited, with #1 stocks returning an average annual gain of +25% since 1988. Over the last 30 days, the Zacks Consensus EPS estimate has witnessed a 0.07% decrease. Eaton presently features a Zacks Rank of #3 (Hold).
Valuation is also important, so investors should note that Eaton has a Forward P/E ratio of 30.15 right now. This signifies a premium in comparison to the average Forward P/E of 22.39 for its industry.
One should further note that ETN currently holds a PEG ratio of 2.58. The PEG ratio is akin to the commonly utilized P/E ratio, but this measure also incorporates the company's anticipated earnings growth rate. The Manufacturing - Electronics industry had an average PEG ratio of 1.76 as trading concluded yesterday.
The Manufacturing - Electronics industry is part of the Industrial Products sector. At present, this industry carries a Zacks Industry Rank of 90, placing it within the top 37% of over 250 industries.
The Zacks Industry Rank assesses the strength of our separate industry groups by calculating the average Zacks Rank of the individual stocks contained within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Keep in mind to rely on Zacks.com to watch all these stock-impacting metrics, and more, in the succeeding trading sessions.
Creates a premier, global powertrain leader focused on commercial and light vehicles with approximately $11 billion in sales and approximately $1.7 billion adjusted EBITDA (approximately 15% adjusted EBITDA margin) on a fully synergized, pro forma 2026 estimated basis Values Eaton Mobility at approximately $5.1 billion and the combined company at over $10 billion in enterprise value Combined company expected to achieve $250 million of run-rate synergies within 24 months following closing Financially compelling combination effected through a Reverse Morris Trust transaction resulting in Eaton shareholders owning at least 50.1% and Dana shareholders owning approximately 49.9% of the combined company at close Accelerates and expands Dana 2030 strategy with 2030 targets increased to $14–$15 billion in sales, approximately 18% adjusted EBITDA margin, and an 8%–9% adjusted free cash flow margin Enhances ability to deliver greater value to customers with a more comprehensive portfolio and deepened capabilities, and diversifies customer base and improves end-market mix , /PRNewswire/ -- Dana Incorporated (NYSE: DAN) today announced it has entered into a definitive agreement with Eaton Corporation plc (NYSE: ETN) to combine with Eaton's Mobility business in a transaction valued at approximately $5.1 billion, representing approximately 8.3x estimated 2026 pro forma adjusted EBITDA before synergies, or approximately 5.9x including run-rate synergies. The transaction combines two highly complementary powertrain portfolios to create a comprehensive, differentiated leader in commercial and light vehicle markets.
The transaction is structured as a Reverse Morris Trust with Eaton shareholders owning at least 50.1% and Dana shareholders owning approximately 49.9% of the combined company at close. Under the terms of the agreement, Eaton will receive a cash distribution of approximately $1.1 billion (subject to adjustments for cash and indebtedness).
Dana's Chairman, R. Bruce McDonald, will serve as Executive Chairman of the combined company with responsibility for integration and synergy realization, and Byron Foster will serve as Chief Executive Officer, with both assuming their roles on July 1, 2026. Timothy Kraus will continue as Chief Financial Officer, and Eaton's Erin Rowse, Senior Vice President Human Resources, Industrial, will serve as Chief Human Resources Officer at closing. The broader leadership team will include executives from both organizations. The combined company's Board of Directors will be comprised of all the members of Dana's Board of Directors and three Eaton designees.
The combination will integrate Dana's global powertrain, thermal, and sealing technologies with Eaton Mobility's commercial vehicle transmissions, engine and emissions products, and advanced electrification capabilities, creating a more comprehensive supplier serving commercial and light vehicle markets, as well as the associated aftermarket channels.
"This transaction marks an important milestone in our transformation and positions Dana as a leading, scaled provider of powertrain solutions," said Byron Foster, Dana's incoming Chief Executive Officer. "By expanding our presence in core markets with new products and complementary technologies, we are enhancing our ability to deliver greater value to customers while strengthening margins through a more balanced portfolio and meaningful synergies. Importantly, we are bringing together highly skilled and dedicated teams whose expertise will drive our future success. This combination further accelerates the execution and expands the scope of our Dana 2030 strategy by increasing scale, deepening our aftermarket capabilities, and advancing both our traditional and electrification technologies."
Paulo Ruiz, Eaton Chief Executive Officer, said, "We are pleased to have reached this agreement, which delivers significant value to Eaton and its shareholders, further aligns our existing portfolio with powerful megatrends and supports Eaton's 2030 growth strategy to lead, invest, and execute for growth. Together, Eaton Mobility and Dana will create a leading and global engineering solutions partner, well positioned to serve commercial vehicle and light vehicle markets worldwide. We are incredibly proud of the reputation and credibility that our Eaton Mobility team has built, and we are confident that this highly complementary combination will drive meaningful value for customers, employees and shareholders alike."
"This transaction meaningfully enhances our long-term financial outlook and enables us to significantly increase our Dana 2030 targets," said Timothy Kraus, Dana's Chief Financial Officer. "Our prior targets included approximately $10 billion in sales, 14% to 15% adjusted EBITDA margins, and a 6% adjusted free cash flow margin. With the addition of Eaton Mobility, we are now targeting $14 to $15 billion in sales, approximately 18% adjusted EBITDA margins, and an 8%-9% adjusted free cash flow margin by 2030. Importantly, after funding the approximately $1.1 billion cash distribution to Eaton, we expect to maintain a strong balance sheet with approximately 1.2x net leverage on a pro forma 2026 estimated basis, supporting continued investment and disciplined capital allocation."
Following closing, Dana is expected to operate with expanded global scale, higher margins, broader customer coverage, and a more complete portfolio spanning mechanical systems and electrified power delivery solutions. The combined company strengthens OEM relationships across commercial and light vehicle markets, and related aftermarkets.
Transaction Details
The transaction, which has been unanimously approved by the Boards of both companies, is structured as a "Reverse Morris Trust" transaction, where Eaton will first separate its Mobility Group to Eaton shareholders through either an exchange offer (split-off) or a pro rata distribution (spin-off), at Eaton's election. Immediately thereafter, Dana will merge with a subsidiary of the Mobility Group, with Dana surviving as a wholly owned subsidiary of the Mobility Group. Upon close of the transaction, existing Eaton shareholders will own at least 50.1% of the shares of the combined company.
The transaction values Eaton Mobility at $5.1 billion on a cash-free, debt-free basis, representing approximately 5.9x fully synergized estimated 2026 pro forma adjusted EBITDA. In connection with the transaction, Eaton is expected to receive a cash distribution of approximately $1.1 billion (subject to adjustments for cash and indebtedness), funded through new debt raised prior to closing.
The combination creates a company with approximately $11 billion in sales on a pro forma 2026 estimated basis. The significantly enhanced financial profile includes improved margins and free cash flow supported by cost synergies and a stronger mix of aftermarket and higher-margin product offerings.
The transaction is expected to deliver $250 million in annual run-rate synergies within 24 months following closing, driven by reduced structural costs, purchasing scale, manufacturing optimization, and engineering efficiencies.
Following completion of the transaction, the combined company is expected to maintain a strong balance sheet with net leverage of approximately 1.2x on a fully synergized pro forma 2026 estimated basis, and Dana is expected to maintain its current credit rating.
The combined company will continue to operate under the Dana Incorporated name and retain its listing on the New York Stock Exchange.
The transaction is expected to be tax-free to Dana and Eaton shareholders for U.S. federal income tax purposes and is expected to close in the first quarter of 2027, subject to approval by Dana shareholders, receipt of regulatory approvals, and other customary closing conditions.
Eaton today issued a separate press release regarding this transaction.
Advisors
Goldman Sachs & Co. LLC is serving as exclusive financial advisor, Kirkland & Ellis LLP is serving as legal counsel to Dana, and Ernst and Young LLP is serving as transaction advisor. Goldman Sachs Bank USA is serving as sole underwriter of the committed financing for the transaction.
Dana to Host Conference Call at 8:30 a.m. Thursday, June 11
Dana will discuss this transaction in a conference call at 8:30 a.m. EDT on Thursday, June 11. The conference call can be accessed by telephone from both domestic and international locations using the information provided below:
Audio streaming and slides will be available online via a link provided on the Dana investor website: www.dana.com/investors. Phone registration will be available beginning at 8:00 a.m. EDT.
A webcast replay can be accessed via Dana's investor website following the call.
About Dana Incorporated
Dana Incorporated (NYSE: DAN) is a global leader in the design and manufacture of highly efficient propulsion solutions for the light- and commercial‑vehicle markets. Guided by its vision to be the world's best powertrain company, Dana delivers advanced conventional and clean‑energy technologies that help customers improve the performance, efficiency, and durability of their vehicles. The company supplies leading vehicle manufacturers and related aftermarkets with industry‑defining drive systems, electrodynamic technologies, and thermal and sealing solutions.
Headquartered in Maumee, Ohio, USA, Dana reported sales of $7.5 billion in 2025. With a history dating to 1904, the company employs 27,000 people in 24 countries across six continents. Learn more at dana.com
Cautionary Notes on Forward-Looking Statements
This communication includes "forward-looking statements" within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995, including statements regarding the proposed transaction between Eaton Corporation plc ("Eaton"), Dana Incorporated ("Dana") and Mobility (USA) Corporation ("SpinCo"). These forward-looking statements generally are identified by the words "believe," "project," "expect," "anticipate," "estimate," "forecast," "outlook," "target," "endeavor," "seek," "predict," "intend," "strategy," "plan," "may," "could," "should," "will," "would," or the negative thereof or variations thereon or similar terminology generally intended to identify forward-looking statements. All statements, other than historical facts, including, but not limited to, statements regarding the expected timing and structure of the proposed transaction and financing of the transaction, the ability of the parties to complete the proposed transaction, the expected benefits of the proposed transaction, including future financial and operating results and strategic and synergistic benefits, the tax consequences of the proposed transaction, and the combined company's plans, objectives, expectations and intentions, legal, economic and regulatory conditions, and any assumptions underlying any of the foregoing, are forward looking statements.
These forward-looking statements are based on Eaton and Dana's current expectations and are subject to risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, the ability to complete the proposed transaction on the timeframe or on the terms currently anticipated or at all, including due to a failure to obtain requisite stockholder and/or regulatory approvals; risks related to difficulties, inabilities or delays in integrating the businesses of Dana and SpinCo; the ability to realize the anticipated benefits of the proposed transaction, including estimated combined EBITDA, estimated combined revenue and estimated run-rate cost synergies; potential impact of the announcement or consummation of the proposed transaction on Eaton and Dana's stock prices; restrictions on the conduct of Eaton and Dana's respective businesses prior to closing and on each of their ability to pursue alternatives to the proposed transaction; the possibility that the proposed transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events, or unforeseen or unknown liabilities; the ability of the combined company to implement its business strategy; the inability of the combined company to retain and hire key personnel; the occurrence of any event that could give rise to termination of the proposed transaction; the risk that stockholder litigation in connection with the proposed transaction or other litigation, settlements or investigations may affect the timing or occurrence of the proposed transaction or result in significant costs of defense, indemnification and liability; risks relating to the ability to obtain financing for the transaction upon acceptable terms or at all; evolving legal, regulatory and tax regimes; changes in general economic and/or industry specific conditions; global economic repercussions related to U.S. and global inflationary pressures and potential recessionary concerns; the risks that the anticipated tax treatment of the proposed transaction is not obtained; the risk of greater than expected difficulty in separating the business of SpinCo from the other businesses of Eaton; risks related to the disruption of management time from ongoing business operations due to the pendency of the proposed transaction, or other effects of the pendency of the proposed transaction on the relationship of any of the parties to the transaction with their employees, customers, suppliers, or other counterparties; and other risk factors detailed from time to time in Eaton and Dana's reports filed with the Securities and Exchange Commission (the "SEC"), including Eaton and Dana's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and other documents filed with the SEC, including documents that will be filed with the SEC in connection with the proposed transaction. The foregoing list of important factors is not exclusive.
Any forward-looking statements speak only as of the date of this communication. None of Eaton, Dana or SpinCo undertakes, and each party expressly disclaims, any obligation to update any forward-looking statements, whether as a result of new information or development, future events or otherwise, except as required by law. Readers are cautioned not to place undue reliance on any of these forward-looking statements.
It should also be noted that projected financial information for the combined company is based on management's estimates, assumptions and projections and has not been prepared in conformance with the applicable accounting requirements of Regulation S-X relating to pro forma financial information, and the required pro forma adjustments have not been applied and are not reflected therein. None of this information should be considered in isolation from, or as a substitute for, the historical financial statements of Dana or SpinCo.
Important Information About the Transaction and Where to Find It
In connection with the proposed transaction, SpinCo may file with the SEC an information statement on Form 10 ("Form 10") or a registration statement on Form S-1/S-4 (the "Form S-1/S-4") that constitutes a prospectus with respect to the shares of common stock, par value $0.01 per share, of SpinCo (the "SpinCo shares") to be issued to Eaton shareholders in the proposed exchange offer (the "prospectus/offer to exchange"). Eaton may also file with the SEC a tender offer statement (the "Schedule TO") with respect to the offer by Eaton to exchange all SpinCo shares for ordinary shares, par value $0.01 per share, of Eaton that are validly tendered and not properly withdrawn prior to the expiration of the exchange offer (if any). In addition, SpinCo intends to file with the SEC a registration statement on Form S-4 (the "Form S-4") that will include a proxy statement of Dana and that also constitutes a prospectus of SpinCo with respect to the SpinCo shares to be issued in the proposed merger (the "proxy statement/prospectus"). Each of Eaton, SpinCo and Dana may also file other relevant documents with the SEC regarding the proposed transaction. This document is not a substitute for the Form 10, Form S-1/S-4, Schedule TO, Form S-4, prospectus/offer to exchange, proxy statement/prospectus or any other document that Eaton, SpinCo or Dana may file with the SEC. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE REGISTRATION STATEMENTS, THE SCHEDULE TO; THE PROSPECTUS/OFFER TO EXCHANGE, THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY BECOME AVAILABLE BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT EATON, DANA, SPINCO AND THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the Form 10, Form S-1/S-4, Schedule TO, Form S-4, the prospectus/offer to exchange and the proxy statement/prospectus (if and when available) and other documents containing important information about Eaton, Dana and SpinCo and the proposed transaction, once such documents are filed with the SEC through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with, or furnished to, the SEC by Eaton and SpinCo will be available free of charge on Eaton's website at https://www.eaton.com/us/en-us/company/investor-relations.html. Copies of the documents filed with, or furnished to, the SEC by Dana will be available free of charge on Dana's website at https://danaincorporated.gcs-web.com/. The information included on, or accessible through, Eaton or Dana's website is not incorporated by reference into this communication.
Participants in the Solicitation
Eaton, Dana, SpinCo and certain of their respective directors and executive officers may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information about the directors and executive officers of Eaton, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Eaton's proxy statement for its 2026 Annual General Meeting of Shareholders, which was filed with the SEC on March 13, 2026. Information about the directors and executive officers of Dana, including a description of their direct or indirect interests, by security holdings or otherwise, is set forth in Dana's proxy statement for its 2026 Annual Meeting of Stockholders, which was filed with the SEC on March 13, 2026. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Form S-4 and the proxy statement/prospectus and other relevant materials to be filed with the SEC regarding the proposed transaction when such materials become available. Investors should read the Form 10, Form S-1/S-4, Schedule TO, Form S-4, the prospectus/offer to exchange and the proxy statement/prospectus carefully if and when available before making any voting or investment decisions. You may obtain free copies of these documents from Eaton or Dana using the sources indicated above.
No Offer or Solicitation
This communication is not intended to and shall not constitute an offer to sell or the solicitation of an offer to sell or the solicitation of an offer to buy or exchange any securities, or a solicitation of any vote or approval, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act or in a transaction exempt from the registration requirements of the Securities Act.
Note Regarding Use of Non-GAAP Financial Measures
In addition to the financial measures presented in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"), this communication includes certain non-GAAP financial measures (collectively, the "Non-GAAP Measures"), such as adjusted EBITDA, adjusted EBITDA margin and adjusted free cash flow margin. These Non-GAAP Measures should not be used in isolation or as a substitute or alternative to results determined in accordance with U.S. GAAP. In addition, Dana's and Eaton's definitions of these Non-GAAP Measures may not be comparable to similarly titled non-GAAP financial measures reported by other companies. A reconciliation of these Non-GAAP Measures to the most directly comparable financial measures calculated and reported in accordance with U.S. GAAP can be found in Dana's filings with the SEC except for financial guidance and other forward-looking information since such a reconciliation is not practicable without unreasonable effort as Dana is unable to reasonably forecast certain amounts that are necessary for such reconciliation.
DUBLIN--(BUSINESS WIRE)--Intelligent power management company Eaton (NYSE: ETN) today announced the next step in Eaton's ongoing portfolio transformation. Eaton entered into a definitive agreement with Dana Incorporated (NYSE: DAN) under which Eaton will separate and combine its Mobility Group with Dana in a Reverse Morris Trust (RMT) transaction creating a combined company valued at over $10 billion. The separation of the Mobility Group marks the next step in Eaton's ongoing portfolio transfor.
U.S. dollar banknotes are seen in this illustration taken March 24, 2026. REUTERS/Dado Ruvic/Illustration Purchase Licensing Rights, opens new tab
SummaryCompaniesDana shares fall 12.5%, Eaton up 2%Eaton shareholders to own 50.1%, Dana 49.9% of new companyDeal lets Eaton focus on electrical and aerospaceJune 11 (Reuters) - Dana (DAN.N), opens new tab will combine with Eaton's (ETN.N), opens new tab mobility business in a deal valuing the unit at about $5.1 billion, the companies said on Thursday, as the auto parts supplier looks to tap into resilient aftermarket demand.
Shares of Dana were down about 12.5%, while those of Eaton rose 2% in afternoon trading.
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Eaton shareholders will own at least 50.1% while Dana shareholders will own about 49.9% of the combined company at close, expected in the first quarter of 2027.
The deal would value the combined company, which will operate as Dana Inc, at more than $10 billion in enterprise value.
Dana said the new entity is expected to achieve $250 million of run-rate cost synergies within 24 months of closing.
Demand for replacement auto parts has stayed robust as U.S. buyers, squeezed by inflation and rising new-car prices, hold onto their vehicles longer.
The industry is also navigating cost pressures from tariffs and an uncertain electric vehicles market, as automakers delay or scale back their EV plans.
"The market still underestimates the earnings power of the 'new' Eaton, without mobility and with its four recent high growth/margin acquisitions," said Bernstein analyst Chad Dillard.
Eaton said earlier this year it was planning to spin off its underperforming automotive businesses, which make technologies that manage and distribute power across vehicle propulsion systems.
Byron Foster, who will join as Dana CEO on July 1, and current CFO Timothy Kraus will continue to reprise their respective roles in the merged company.
The move will allow Dublin, Ireland-based Eaton, a supplier of electrical components and wiring, to focus its portfolio on electrical and aerospace businesses in data centers, aerospace aftermarket and defense.
Reporting by Anshuman Tripathy in Bengaluru; Editing by Tasim Zahid and Joyjeet Das
Our Standards: The Thomson Reuters Trust Principles., opens new tab
Eaton (ETN) stands out as an electrification powerhouse with a robust track record. Eaton is foundational to the industrial buildout supporting AI and data center development. Eaton has two other sectors, Aerospace and Global Electrification that are also doing well.
Shares of Eaton (ETN) are seeing a modest increase, while Dana Inc. (DAN) shares are experiencing a significant decline following the announcement of a Reverse
Data center REITs have delivered sector-leading, consistent outperformance, driven by secular tailwinds like AI, cloud computing, and digital transformation. DLR, EQIX, and IRM are trading at premium valuations, reflecting strong fundamentals, but current multiples suggest waiting for a pullback before adding exposure. American Tower is the top pick for new data center exposure, offering integrated connectivity and compute, trading at a discount with a 4% yield and significant upside potential.
Equinix (EQIX - Free Report) appears an attractive pick, as it has been recently upgraded to a Zacks Rank #2 (Buy). This rating change essentially reflects an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.
A company's changing earnings picture is at the core of the Zacks rating. The system tracks the Zacks Consensus Estimate -- the consensus measure of EPS estimates from the sell-side analysts covering the stock -- for the current and following years.
Individual investors often find it hard to make decisions based on rating upgrades by Wall Street analysts, since these are mostly driven by subjective factors that are hard 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.
Therefore, the Zacks rating upgrade for Equinix basically reflects positivity about its earnings outlook that could translate into buying pressure and an increase in its stock price.
Most Powerful Force Impacting Stock PricesThe change in a company's future earnings potential, as reflected in earnings estimate revisions, and the near-term price movement of its stock are proven to be strongly correlated. That's partly because of the influence of institutional investors that use earnings and earnings estimates for calculating the fair value of a company's shares. An increase or decrease in earnings estimates in their valuation models simply results in higher or lower fair value for a stock, and institutional investors typically buy or sell it. Their transaction of large amounts of shares then leads to price movement for the stock.
For Equinix, rising earnings estimates and the consequent rating upgrade fundamentally mean an improvement in the company's underlying business. And investors' appreciation of this improving business trend should push the stock higher.
Harnessing the Power of Earnings Estimate RevisionsEmpirical 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 are tracked for making an investment decision. Here is where the tried-and-tested 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 externally-audited track 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 >>>> .
Earnings Estimate Revisions for EquinixFor the fiscal year ending December 2026, this data center operator is expected to earn $42.52 per share, which is unchanged compared with the year-ago reported number.
Analysts have been steadily raising their estimates for Equinix. Over the past three months, the Zacks Consensus Estimate for the company has increased 1.7%.
Bottom LineUnlike the 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 4,000 stocks at any point in time. Irrespective of market conditions, only the top 5% of the Zacks-covered stocks get a "Strong Buy" rating and the next 15% get a "Buy" rating. So, the placement of a stock in the top 20% of the Zacks-covered stocks indicates its superior earnings estimate revision feature, making it a solid candidate for producing market-beating returns in the near term.
You can learn more about the Zacks Rank here >>>
The upgrade of Equinix to a Zacks Rank #2 positions it in the top 20% of the Zacks-covered stocks in terms of estimate revisions, implying that the stock might move higher in the near term.
Key Takeaways EQIX rose 38.9% in six months as AI, cloud and networking demand boosts digital infrastructure needs.First-quarter 2026 recurring revenues grew 10%, while interconnection revenues increased 9% year over year.Equinix had 46 major projects underway and has raised its dividend five times in the past five years. Shares of Equinix, Inc. (EQIX - Free Report) have gained 38.9% over the past six months compared with the industry’s rise of 8.7%.
The company remains a key beneficiary of the multi-year shift toward hybrid multicloud architectures and higher AI-driven data exchange needs. Product innovation in Fabric and continued expansion activity support longer-term growth and a durable dividend.
Last month, this Zacks Rank #2 (Buy) REIT reported first-quarter 2026 AFFO per share of $10.79, up 11.6%, but marginally missed the Zacks Consensus Estimate. Results reflected solid demand for digital infrastructure, even as higher costs weighed modestly on consensus comparisons. Annualized gross bookings of $378 million stood out in the quarter.
Image Source: Zacks Investment Research
Factors Behind EQIX's Stock Price Surge: Will This Trend Last?Rising AI, cloud and networking workload lift demand for colocated and interconnected infrastructure across Equinix’s global footprint. Management noted that customer conversations have moved from piloting AI to enterprise-wide adoption at scale. The combination of edge proximity, interconnection density and sovereignty needs supports durable demand for Equinix’s neutral platform over multi-year investment cycles.
Equinix’s revenue base remains largely recurring, which helps convert bookings into predictable cash flow and supports operating leverage as utilization rises. In first-quarter 2026, recurring revenues grew 10% year over year on a normalized and constant currency basis. Given the growing demand for data exchanges across the world, Equinix is well-positioned to expand its revenue base. Management expects normalized monthly recurring revenue growth of 9%-10%in 2026.
The interconnection portfolio remains central as enterprises pursue hybrid multicloud architectures and need direct, high-performance connectivity. In first-quarter 2026, interconnection revenues increased 9% year over year on a normalized and constant currency basis. Operationally, net cabinet billing increased by 4,100, and net interconnection adds grew by 5,800, with a backlog of cabinets sold but not yet installed at record levels. These results build on the company’s scale advantage, which included surpassing 0.5 million interconnections worldwide by the end of 2025.
Equinix continues to invest to meet demand while using presales, disciplined site selection and partnerships to support returns on new capacity. In first-quarter 2026, the company had 46 major projects underway across 32 markets, including six xScale projects, with more than 70% of retail expansion capex directed to major metros. Total capital expenditures were $1.256 billion in the quarter, largely tied to IBX expansion and platform investment.
Equinix has maintained a shareholder return focus alongside growth investment. The company has increased its dividend five times in the last five years, and its five-year annualized dividend growth rate is 14.11%. While capital needs remain elevated, the recurring revenue model and growing AFFO per share outlook help support the dividend over time.
Other Stocks to ConsiderSome other top-ranked stocks from the broader REIT sector are Chatham Lodging Trust REIT (CLDT - Free Report) and Cousins Properties (CUZ - Free Report) , carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for CLDT’s 2026 FFO per share is pegged at $1.27, which indicates year-over-year growth of 24.5%.
The consensus estimate for CUZ’s full-year FFO per share is pinned at $2.93, which calls for a 3.2% increase from the year-ago period.
Note: Anything related to earnings presented in this write-up represents funds from operations (FFO) — a widely used metric to gauge the performance of REITs.
Resources Investor Relations Journalists Agencies Client Login Send a Release News Products Contact , /PRNewswire/ -- Equinix, Inc. (Nasdaq: EQIX), the world's digital infrastructure company®, today announced that Olivier Leonetti, Chief Financial Officer, and Phillip Konieczny, Senior Vice President of Finance, will present at the Nareit REITweek Conference on Wednesday, June 3, at 9:30 a.m. ET.
The presentation will be made available via webcast on the Investor Relations section of the Equinix website at www.equinix.com/investors.
About Equinix
Equinix, Inc. (Nasdaq: EQIX) shortens the path to boundless connectivity anywhere in the world. Its digital infrastructure, data center footprint and interconnected ecosystems empower innovations that enhance our work, life and planet. Equinix connects economies, countries, organizations and communities, delivering seamless digital experiences and cutting-edge AI—quickly, efficiently and everywhere.
On a recent All-In Podcast episode dissecting SpaceX’s S-1 filing, guest investor Gavin Baker and the hosts framed Elon Musk’s privately held rocket and connectivity empire as something more ambitious than a high-growth tech company. David Friedberg argued that “having a space-based communication network, space-based data centers, and space-based communication back down to Earth wireless” creates “a backup for civilization” that governments cannot control. That framing is the philosophical core of the bull case for a $2 trillion valuation, and it matters for every public company building the terrestrial side of the AI stack.
The $2 Trillion Math Those raw S-1 numbers give the entire investment pitch real teeth. SpaceX generated a massive $18.674 billion in consolidated 2025 revenue, with its powerhouse Starlink Connectivity segment pulling in $11.4 billion of that total and printing a $4.4 billion operating profit. For Q1 2026, consolidated revenue held strong at $4.694 billion with Adjusted EBITDA tracking at $1.127 billion. Chamath Palihapitiya’s bullish take on the All-In Podcast has SpaceX setting the tone for a $2 trillion IPO valuation, which looks incredibly achievable once you bake in their exponential, multi-segment forward run rates.
The wild AI angle is what bridges pure science fiction directly to a Wall Street spreadsheet. SpaceX officially absorbed xAI back in February 2026, forming a heavy-hitting third operating segment alongside Space and Starlink. Their newly disclosed compute deal with Anthropic, paying a mind-boggling $1.25 billion every single month for access to the Colossus supercomputer clusters, validates this tech stack instantly, turning their AI division into a massive, multi-billion-dollar annual revenue machine.
Execution Edge: The 66-Day Data Center Baker noted SpaceX has compressed its data center build time from 122 days to 66 days, dramatically faster than competitors. Cursor’s Composer 2.5 model reportedly became “Pareto dominant” after just three to four weeks of reinforcement learning on SpaceX’s Colossus 2 cluster, with allegedly more tokens of coding data than exist on the public internet. SpaceX itself argues that “the key constraints in the continued growth of AI are physical” and that no other AI company has better control over the full physical stack.
The Tesla Bridge Tesla (NASDAQ:TSLA | TSLA Price Prediction) is the public-market proxy. Tesla disclosed a $2 billion investment in SpaceX equity and a partnership to build the largest chip fab for vertically integrated semiconductor manufacturing at the Gigafactory Texas campus, per the company’s Q1 FY2026 8-K filing. Tesla shares closed at $426.01 on May 22, up 25% over the past year, with Polymarket assigning a 92% probability that SpaceX will carry a higher valuation than Tesla by June 30, 2026.
What It Means For The AI Infrastructure Trade The hyperscaler CapEx race is the backdrop. NVIDIA (NASDAQ:NVDA) reported Q1 FY2027 revenue of $81.61 billion, up 85% year over year, with total supply-related commitments of $119.0 billion. Microsoft (NASDAQ:MSFT) posted Q3 FY2026 commercial RPO of $627 billion and an AI business at a $37 billion annualized run rate, up 123% year over year. Alphabet (NASDAQ:GOOGL) guided 2026 CapEx of $175 to $185 billion, with Google Cloud backlog above $460 billion.
If Musk’s orbital compute layer delivers on Friedberg’s framing, every dollar Big Tech is committing to terrestrial racks becomes more competitive, not less. Equinix (NASDAQ:EQIX) sits at the center of that terrestrial layer. Equinix carries a $105.5 billion market cap, trades at a forward PE of 61, and has 25 analyst Buy or Strong Buy ratings against six Holds or Sells. The stock is up 42% year to date through May 22.
Investor Takeaway If you’re looking to play this, remember that SpaceX is still private, so you have to look at the public markets for an indirect trade. Here is the big takeaway for investors: if that eye-popping $2 trillion valuation pitch is even halfway right, the massive AI infrastructure spending we’re seeing at NVIDIA, Microsoft, Alphabet, and Equinix isn’t the peak, it’s just the opening chapter of a massive buildout where space and ground tech supercharge each other.
Moving forward, you’ll want to watch three things closely: how deeply Tesla and SpaceX integrate their tech, how that massive Anthropic compute partnership plays out, and whether Elon Musk can actually maintain his wild 66-day construction cadence as the satellite constellation scales up.
Artificial intelligence (AI) mania has undeniably taken the stock market by storm, spurring speculative trades from investors who wouldn't normally make them. The fear of missing out is palpable.
The fact is, however, there's still much to be said for buying quality stocks in proven businesses and just letting time -- and cash dividend payments -- do most of the heavy lifting.
With that as the backdrop, here's a rundown of three great dividend stocks to buy and hold for the next 10 years. That's not to say they won't be worth owning past that point. It's just that the market is arguably underestimating just how strong the coming decade could be for its underlying companies.
Image source: Getty Images.
1. Merck Take pharmaceutical giant Merck (MRK 0.58%) as an example. Its cancer-fighting wonder drug Keytruda will lose its U.S. patent protection in 2028, while its European patents will expire in 2030. Given that nearly half of the company's 2025 revenue came from Keytruda's sales of $32 billion, the stock has understandably underperformed since 2024 as this impending loss of patent protection inches closer.
Just don't lose sight of the fact that Merck's been making moves to offset the eventual loss of exclusivity for Keytruda. Case in point: Late last year, the company acquired Verona Pharma, adding its COPD treatment Ohtuvayre to its drug portfolio; analysts say it could eventually generate up to $4 billion in annual revenue.
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And just this month, Merck acquired Terns Pharmaceuticals, gaining access to its promising chronic myeloid leukemia treatment, TERN-701. It's still in early-stage trials, but the FDA's "breakthrough" designation underscores the drug's ultimate potential for approval.
All told, Merck's current pipeline consists of more than 50 trials, over 30 of which are in phase 3, and five of which are currently under FDA review. The company continues to suggest it has $70 billion in annual revenue just waiting to be generated by the drugs currently in development to replace Keytruda once its revenue is reduced to nil. It's just not going to reach that sales pace until the mid-2030s.
Simply making progress toward that target, however, should produce a bullish tailwind for Merck stock during these 10 years.
2. Verizon Verizon Communications (VZ +1.49%) isn't a growth stock by any stretch of the imagination. That's because the country's wireless market is as mature as it is saturated. Pew Research reports 98% of all adults living in the United States already own a mobile phone, for perspective. Population growth accounts for most of its business growth, and it's pretty slow these days.
The very nature of its business, however, still makes this name a fantastic dividend stock. Consumers may cut back on discretionary goods like apparel or postpone buying a new car when money gets tight. Few people are willing to let go of their mobile connection to the rest of the world, though. They'll pay whatever it takes to keep their phones turned on.
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Verizon just needs to make sure it's price-competitive -- which it is. In fact, the company's expecting to add between 750,000 and 1 million (net) new postpaid customers this year, adding to the 94 million it already serves. Not bad.
But there are a couple of other growth engines at work here that most investors may not fully appreciate.
One of them is Verizon's fixed wireless access (FWA) home internet service, which wirelessly provides consumers with broadband connectivity. This business now serves 6 million customers, adding more than 270,000 just last quarter, versus practically none as of 2021. This option is becoming an increasingly popular alternative in an industry that's long depended on cable companies' beefy coaxial lines connected directly to consumers' homes.
The other underappreciated growth driver here is Verizon's foray into artificial intelligence. While it's obviously not a hardware provider like Nvidia, Verizon's AI Connect arm helps institutions establish the communications and networking infrastructure needed to make the most of what AI can do for them. Alphabet and Meta Platforms are a couple of this division's current customers.
Newcomers will be plugging into a forward-looking dividend yield of 6%. That yield is based on a dividend, by the way, that's now been raised for 19 consecutive years.
3. Equinix Finally, add Equinix (EQIX +0.87%) to your list of dividend stocks to hold for the next 10 years. It's not a household name and may never be one. That doesn't mean it's not a terrific dividend holding, though.
Equinix is a data center owner/operator, leasing access to its AI-capable servers to organizations that can't -- or just don't want to -- build one of their own. Coca-Cola Europacific Partners, VMWare, and Zoom Communications are just some of its customers, contributing to last quarter's $2.44 billion in (largely recurring) revenue that was up 10% year over year. Profits are growing even faster now that the company has achieved meaningful scale.
The artificial intelligence data center business, of course, is a great one to be in right now. Mordor Intelligence expects the industry to grow at an average annual rate of 25% through 2031, although it could certainly continue growing at a strong double-digit pace after that.
That's not quite Equinix's big selling point to interested income investors, however. Neither is the fact that the company has now upped its yearly per-share payout for 11 consecutive years.
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Rather, what makes this stock such a compelling income-producing prospect is the underlying company's structure. It's a real estate investment trust (REIT). That just means it doesn't pay corporate income taxes on its own profits, as long as it passes the majority of those profits along to shareholders in the form of dividends.
This ultimately means Equinix is a very efficient way for investors to plug into the fast-growing AI data center opportunity and begin collecting a meaningful, recurring return on their investment right away.
The forward-looking yield of just under 2% isn't exactly thrilling. Just keep in mind that the last quarterly dividend increase was a 10% improvement, extending a long streak of similar dividend growth.
As the tech sector hunts for reliable, carbon-free energy to power data centers, investors are looking at NuScale Power (SMR +5.43%) and Oklo (OKLO +0.04%) to see which stock is a better buy.
NuScale focuses on its certified reactor design to serve traditional utilities and industrial clients. Oklo takes a different route, planning to build and operate its own fast-fission plants with high-profile backing. Both firms are leading the shift toward modular nuclear power, but they carry very different financial profiles and development timelines.
The case for NuScale PowerNuScale Power is developing proprietary small modular reactor (SMR) technology and related plant services to generate carbon-free power. Its target markets include data centers, desalination plants, and commercial hydrogen production.
The company aims to be a leader among electric utility stocks by providing carbon-free electricity to industrial and commercial users. However, it has an exclusive commercialization partner, ENTRA1 Energy. That adds a layer of risk to the business because NuScale is obligated to make large milestone payments to ENTRA1 without guaranteed revenue contracts in return.
Nuscal hasn’t commercialized its technology, so it’s not generating any meaningful revenue yet and remains deep in losses. It doesn’t have any long-term debt, though, and ended the first quarter with $341 million in cash and cash equivalents and another $836 million in short-term investments. That’s nearly $1 billion that the company can bank on any time if it wants cash to run operations and fund growth.
The case for OkloOklo is developing fast-fission power plants, called Aurora powerhouses, and fuel recycling technology to produce carbon-free energy. It eventually aims to make money by selling electricity, targeting high-demand users like data centers and industrial facilities. It has already gained traction through a prepayment agreement with Meta Platforms (META 0.72%) and non-binding interest from Equinix (EQIX +0.87%). Oklo has also signed a master power agreement with Switch for 12 gigawatts (GW) of capacity. These agreements show strong interest from major technology companies looking for reliable energy.
Oklo is a pre-revenue company, as its power plants are still in the early stages of permitting and construction. It’s a loss-making company as it is investing heavily in engineering and regulatory approvals. Like NuScale, Oklo also doesn’t carry any long-term debt but has a massive cash balance of over $2 billion, thanks mainly to recent stock sale.
Risk profile comparisonNuScale faces risks because it has not yet signed binding contracts to deliver its reactor modules, which leaves its future revenue uncertain. It must also compete against large, state-supported entities like China National Nuclear Corporation and other global players in the nuclear sector. There are also concerns that the cost of its electricity might not be competitive against other energy sources in the U.S. Delays in the design or manufacture of its first commercial units could also harm its reputation and financial health.
Oklo has not yet built any powerhouses or secured binding purchase agreements, making its future performance difficult for investors to predict. Building fuel recycling facilities is also a complex process that could face regulatory hurdles or cost overruns. Finally, any negative public perception of nuclear energy could severely limit the demand for its technology.
Valuation comparisonWhile Oklo is valued based on high future earnings estimates, NuScale is currently priced relative to its sales because it has not yet reached profitability.
MetricNuScale PowerOkloForward P/En/a141.6xP/S ratio98.5xn/aSector benchmark uses the SPDR XLU sector ETF.
Valuation metrics sourced from Financial Modeling Prep (FMP) and may differ from other data providers.
Both Oklo and NuScale Power are riding the massive tailwinds of artificial intelligence (AI) data center energy demand and the U.S. government’s backing of nuclear energy. The Trump administration aims to quadruple U.S. nuclear capacity to 400 GW by 2050 and is fast-tracking the development of new reactors.
Between the two stocks, though, I’d buy Oklo. That’s because of stronger collaborations and partnerships, as well as operational progress.
OKLO data by YCharts
Oklo is already part of multiple Department of Energy (DOE) nuclear pilot programs. It has a major July 4 target to achieve criticality (self-sustaining nuclear chain reaction) at its Groves Isotope Test Reactor in Texas.
It is also making progress in nuclear fuel recycling and is building facilities, since fast-fission plants can run on both fresh and used fuel. That’s a huge competitive advantage because the U.S. has a massive stockpile of unused energy such as plutonium left over from commercial nuclear waste , which the government wants to put to use. The DOE has just selected Oklo, along with a few other companies, for its Surplus Plutonium Utilization Program.
Oklo also has major partnerships. For example, it is collaborating with Nvidia (NVDA +0.34%) to use the tech giant’s AI computing power and software for nuclear research and development.
NuScale is the first company to win design approval for its SMRs from the U.S. Nuclear Regulatory Commission (NRC). Through programs like ENTRA1 Energy’s 6 GW deal with the Tennessee Valley Authority (TVA), NuScale also has a strong project pipeline.
Yet, Oklo’s direct collaborations with the DOE and companies like Nvidia, and a massive cash balance, make it a tad “safer” than NuScale Power.
Investors interested in Finance stocks should always be looking to find the best-performing companies in the group. Has Equinix (EQIX - Free Report) been one of those stocks this year? Let's take a closer look at the stock's year-to-date performance to find out.
Equinix is a member of our Finance group, which includes 832 different companies and currently sits at #6 in the Zacks Sector Rank. The Zacks Sector Rank gauges the strength of our 16 individual sector groups by measuring the average Zacks Rank of the individual stocks within the groups.
The Zacks Rank is a successful stock-picking model that emphasizes earnings estimates and estimate revisions. The system highlights a number of different stocks that could be poised to outperform the broader market over the next one to three months. Equinix is currently sporting a Zacks Rank of #2 (Buy).
Over the past 90 days, the Zacks Consensus Estimate for EQIX's full-year earnings has moved 0.9% higher. This means that analyst sentiment is stronger and the stock's earnings outlook is improving.
Based on the latest available data, EQIX has gained about 39.6% so far this year. At the same time, Finance stocks have gained an average of 0.6%. As we can see, Equinix is performing better than its sector in the calendar year.
BOK Financial (BOKF - Free Report) is another Finance stock that has outperformed the sector so far this year. Since the beginning of the year, the stock has returned 8.9%.
The consensus estimate for BOK Financial's current year EPS has increased 4.7% over the past three months. The stock currently has a Zacks Rank #2 (Buy).
Looking more specifically, Equinix belongs to the REIT and Equity Trust - Retail industry, which includes 19 individual stocks and currently sits at #108 in the Zacks Industry Rank. Stocks in this group have gained about 18.9% so far this year, so EQIX is performing better this group in terms of year-to-date returns.
On the other hand, BOK Financial belongs to the Banks - Southwest industry. This 19-stock industry is currently ranked #76. The industry has moved +4.8% year to date.
Investors interested in the Finance sector may want to keep a close eye on Equinix and BOK Financial as they attempt to continue their solid performance.
A month has gone by since the last earnings report for Equinix (EQIX - Free Report) . Shares have lost about 1.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Equinix due for a breakout? Well, first let's take a quick look at the most recent earnings report in order to get a better handle on the recent drivers for Equinix, Inc. before we dive into how investors and analysts have reacted as of late.
Equinix Q1 AFFO & Revenues Miss Estimates on Higher ExpensesEquinix reported first-quarter 2026 AFFO per share of $10.79, up 11.6% from $9.67 a year ago but missing the Zacks Consensus Estimate of $10.89 by 0.9%.
Total revenues were $2.44 billion, up 9.8% year over year, but below the consensus mark of $2.51 billion by 2.6%. Results reflected solid demand for digital infrastructure, even as higher costs weighed modestly on consensus comparisons. Annualized gross bookings of $378 million stood out in the quarter.
Equinix Recurring Revenues Rise Across RegionsRecurring revenues were $2.33 billion in the first quarter of 2026, up from $2.09 billion a year ago, while non-recurring revenues were $113 million compared with $138 million in the prior-year quarter.
By geography, recurring revenues from the Americas, the EMEA and Asia Pacific rose 12.4%, 10.2% and 12.7%, respectively, year over year. Although non-recurring revenues from the EMEA increased 40.7%, they decreased 35.7% and 26.8% in the Americas and Asia Pacific, respectively.
Equinix Logs Record Bookings and Deepens AI MomentumEquinix delivered $378 million of annualized gross bookings in the quarter and cited the largest first-quarter bookings in the company’s history, leading to a record backlog. The company also reported record annualized presales of roughly $140 million, underscoring continued customer commitments even as deployments phase in over time.
Customer activity remained broad-based. Management noted that the company completed more than 3,800 transactions with over 3,100 unique customers and processed more than 20,000 self-service orders, indicating sustained engagement across its platform. About 60% of the company’s largest deals were described as AI-related, supporting high-density AI infrastructure demand.
Equinix Expands Operating Profit Despite High ExpensesEquinix generated operating income of $577 million in the first quarter of 2026, up from $458 million in the year-ago quarter, reflecting stronger underlying operating performance.
The company posted adjusted EBITDA of $1.25 billion, up 16.7% year over year, while adjusted EBITDA margin came in at 51%, marking a record margin level. The cost structure remained sizable, with cost of revenues rising 9.4% to $1.19 billion, sales and marketing expense increasing 5.2% to $241 million and general and administrative expense growing $4 million to $444 million.
Equinix Maintains Liquidity While Funding Heavy InvestmentEquinix ended the quarter with a sizable liquidity cushion and continued to invest for growth. The company cited roughly $7.1 billion of available liquidity and about $20 billion of total gross debt, with net leverage of 3.8x, reflecting a balance sheet positioned to support expansion while managing funding costs.
Capital intensity remained high. Total capital expenditures were $1.26 billion in the quarter, including $32 million of recurring capital expenditures and $1.22 billion of non-recurring spend.
Equinix Raises 2026 Outlook After Strong Q1 ExecutionEquinix raised its full-year 2026 outlook across key metrics following the quarter. The company now expects full-year revenues of $10.144-$10.244 billion, compared to the prior guided range of $10,123-10,223. Management predicts an adjusted EBITDA of $5.165-$5.245 billion and an adjusted EBITDA margin of about 51%.
AFFO is projected at $4.198-$4.278 billion, with AFFO per share expected at $42.31-$43.11, up from $41.93-42.74 guided earlier.
For second-quarter 2026, management guided revenues to $2.571-$2.611 billion, implying a 9-10% increase over the prior quarter. Adjusted EBITDA is expected in the range of $1.349-$1.389 billion, with around a 52-53% margin.
How Have Estimates Been Moving Since Then?Estimates review followed a upward path over the past two months.
VGM ScoresAt this time, Equinix has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook Equinix has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Investor interest in the AI space continues to grow, with many focusing on AI infrastructure plays to meet the increasing demand for data centers or on semiconductor stocks building the components necessary for AI platforms to function. One potentially overlooked area that is vital to AI but not directly related to the technology itself is land. Electricity consumption from data centers alone in the United States could triple that of the entire nation of Ireland by 2028, and generating that much power requires massive amounts of land.
If demand continues at its current rate, investors may expect an increasingly contentious battle for prime land used by data center developers—space that is open and accessible, with strong power infrastructure, not susceptible to natural disasters, and so on. Two real estate investment trusts (REITs) and an exchange-traded fund focused on data center real estate and development provide investors with exposure to this high-demand but underappreciated aspect of the AI boom.
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Equinix's Data Center Strategy Positions the REIT for Continued GrowthEquinix Inc. NASDAQ: EQIX is a REIT specifically focused on data centers, operating more than 280 different centers around the world. Shares are up about 40% year-to-date (YTD) but have essentially plateaued since late April. One reason for this is that the company's Q1 2026 results were, in some respects, not as impressive as analysts had predicted: revenue growth of 10% year-over-year (YOY), for instance, was not as robust as expected.
Equinix Today
$1,052.88 +9.71 (+0.93%)
As of 10:26 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$710.52▼
$1,128.68Dividend Yield1.96%
P/E Ratio72.76
Price Target$1,143.60
Still, there are plenty of reasons to be excited about Equinix and its advantageous position as data center demand grows. For one, recurring revenue is growing, as are adjusted EBITDA margin and adjusted funds from operations. Further, management raised full-year guidance on revenue and EBITDA in the latest report.
Equinix is also positioned to boost its capacity dramatically going forward, with plans for capital expenditures of up to $4.1 billion in 2026 on 46 major new projects. Backlog and bookings are both up as well, demonstrating the company's ability to appeal to a growing list of customers.
All of these signs point to future potential, and so it's no surprise that Equinix has a strong appeal across Wall Street. 23 out of 29 analysts view the firm favorably and have assigned a Buy or equivalent rating.
A Fast-Growing Data Center Dividend Yield PlayDigital Realty Trust Inc. NYSE: DLR takes a similar approach to Equinix, as it is a REIT that owns and operates data centers and provides colocation solutions. In terms of sales, its 16% YOY growth for Q1 2026 outpaced Equinix's performance.
Digital Realty Trust Today
DLR
Digital Realty Trust
$185.03 +2.19 (+1.20%)
As of 10:26 AM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$146.23▼
$208.14Dividend Yield2.64%
P/E Ratio48.82
Price Target$215.89
The firm also brought its total backlog to $1.8 billion during the quarter while achieving record interconnection bookings of $98 million. Management raised full-year guidance on funds from operations to between $8 and $8.10, representing growth of about 9% YOY at the midpoint.
As a REIT, Digital Realty is obligated to pay out a majority of its earnings as dividends, and itsDLR 2.6% dividend yield may appeal to investors while also outpacing Equinix on this metric. Like its larger rival, Digital Realty is favored by many analysts, as 21 out of 29 call DLR shares a Buy.
The firm also has upside potential of more than 10% according to its consensus price target, even after already returning more than 20% YTD.
A Data Center ETF, But Not a Pure-Play InvestmentFor investors not keen to pick individual names in the data center land grab, the Global X Data Center & Digital Infrastructure ETF NASDAQ: DTCR offers a convenient way to access multiple companies in a single investment. This ETF holds a portfolio of more than two dozen global firms with an interest in data center infrastructure.
Global X Data Center & Digital Infrastructure ETF Today
DTCR
Global X Data Center & Digital Infrastructure ETF
$31.33 +0.24 (+0.77%)
As of 10:09 AM Eastern
52-Week Range$17.85▼
$32.79Dividend Yield0.73%
Assets Under Management$2.24 billion
DTCR has positions in Equinix and Digital Realty Trust—indeed, these are the two largest holdings in the portfolio by percentage, representing close to a quarter of the total basket. It supplements these with a collection of other data center REITs, semiconductor manufacturers, and digital infrastructure players.
Investors should note that DTCR is not a pure-play data center real estate bet, given its chip-maker holdings. This makes it suitable for those looking for a broader play on AI infrastructure, rather than a focus on land and property directly. Still, it provides a modest dividend yield of 0.7% as a bonus on top of YTD returns of about 50%. For an expense ratio of 0.50%—somewhat higher than most passively managed funds, but perhaps worthwhile given the unique theme—investors can leave the portfolio management to someone else while reaping the rewards to be found in the fast-growing AI infrastructure space.
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