American Software(AMSWA) ZACKS·2024-08-28 17:01Core Viewpoint - American Software (AMSWA) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Estimates and Stock Price Movement - The Zacks rating system is based on the Zacks Consensus Estimate, which reflects EPS estimates from sell-side analysts for the current and following years [1]. - Changes in earnings estimates are strongly correlated with near-term stock price movements, largely due to institutional investors who adjust their valuations based on these estimates [3]. Impact of Earnings Estimate Revisions - Rising earnings estimates for American Software suggest an improvement in the company's underlying business, which is expected to drive the stock price higher [3]. - The Zacks Rank system effectively utilizes earnings estimate revisions to classify stocks, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [4]. Current Earnings Estimates for American Software - For the fiscal year ending April 2025, American Software is expected to earn $0.38 per share, reflecting a year-over-year decline of -25.5% [5]. - Over the past three months, the Zacks Consensus Estimate for American Software has increased by 5.6% [5]. Zacks Rating System Overview - The Zacks rating system maintains a balanced distribution of 'buy' and 'sell' ratings across over 4000 stocks, with only the top 5% receiving a 'Strong Buy' rating [6]. - The upgrade of American Software to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [7].