Will Tencent Music Entertainment Group-sponsored ADR (TME) benefit as earnings estimates rise?

Tencent Music Entertainment Group-sponsored ADR (TME) looks an attractive pick given a notable improvement in the company’s earnings outlook. The stock has been strong of late, and momentum could continue as analysts continue to raise earnings estimates for the company.

The rising trend in estimate revisions due to growing analyst optimism about this company’s earnings prospects should be reflected in the stock price. Finally, empirical research shows a strong correlation between trends in earnings estimate revisions and short-term stock price movements. Our stock evaluation tool – the Zacks Rank – is based on this insight.

The five-tier Zacks ranking system, ranging from a Zacks rank #1 (strong buy) to a Zacks rank #5 (strong sell), has an impressive, externally verified track record of outperformance, with Zacks #1 -Shares an average annual return of +25% since 2008.

For the Tencent Music Entertainment Group-sponsored ADR, there was strong consensus among the covering analysts in raising earnings estimates, which has helped raise consensus estimates for the next quarter and full year significantly.

The following chart shows the development of the Zacks Consensus 12-month EPS estimate:

12 Month EPS

Estimate revisions for the current quarter

The earnings estimate of $0.10 per share for the current quarter represents a +11.11% change from the number reported a year ago.

Over the past 30 days, two estimates for Tencent Music Entertainment Group-sponsored ADR have moved higher versus no negative revisions. As a result, the Zacks consensus estimate is up 45.46%.

Estimate revisions for the current year

The company is expected to earn $0.39 per share for the full year, a 0% change from last year.

There was also an encouraging trend in estimate revisions for the current year. Over the past month, two estimates for Tencent Music Entertainment Group-sponsored ADR have moved higher versus no negative revisions. This has boosted the consensus estimate by 25%.

Favorable Zacks rank

The ADR sponsored by Tencent Music Entertainment Group currently carries a Zacks Rank #2 (Buy) thanks to promising estimate revisions. The Zacks Rank is a proven rating tool that helps investors harness the power of earnings estimate revisions effectively and make the right investment decisions. You can see the full list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that Zacks #1 (Strong Buy) and #2 (Buy) stocks significantly outperform the S&P 500.

bottom line

While strong estimate revisions for the Tencent Music Entertainment Group-sponsored ADR have attracted decent investment and propelled the stock 20.2% over the past four weeks, the stock could still have further upside. So you can add it to your portfolio immediately.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.