Valaris (VAL) Soars 8.6%: Is Further Upside Left in the Stock?

Valaris Limited VAL shares soared 8.6% in the last trading session to close at $88.23. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 6.7% loss over the past four weeks.

Valaris shares rose as a sharp increase in crude oil prices improved the outlook for offshore drilling activity. Higher oil prices can make offshore exploration and production projects more economically attractive for energy companies, which could lead to increased spending on new projects and greater demand for drilling rigs. This positive industry backdrop supported investor sentiment toward Valaris and other offshore drilling companies.

This company is expected to post quarterly earnings of $1.00 per share in its upcoming report, which represents a year-over-year change of -62.3%. Revenues are expected to be $573 million, down 3.8% from the year-ago quarter.

While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.

For Valaris, the consensus EPS estimate for the quarter has been revised 20.6% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on VAL going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

Valaris is a member of the Zacks Oil and Gas - Drilling industry. One other stock in the same industry, Borr Drilling BORR, finished the last trading session 5.8% higher at $4.36. BORR has returned -8.4% over the past month.

Borr Drilling's consensus EPS estimate for the upcoming report has remained unchanged over the past month at -$0.03. Compared to the company's year-ago EPS, this represents a change of -130%. Borr Drilling currently boasts a Zacks Rank of #3 (Hold).

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This innovative software-as-a-service firm upped its user base +22% year over year. That rate is increasing and margins are expanding as AI efficiencies take effect. Of course, all our elite picks aren't winners, but this one could far surpass earlier Zacks' Stocks Set to Double like D-Wave Quantum, which shot up +680.1%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research