Strength Seen in REE Automotive (REE): Can Its 11.0% Jump Turn into More Strength?

REE Automotive Ltd. (REE) shares soared 11% in the last trading session to close at $6.18. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock’s 50.1% gain over the past four weeks.

REE’s shares are rising after it inked a deal with a major supplier to the automotive industry. Recently, REE Automotive entered into a strategic agreement with Motherson Group. Per the agreement, Motherson will manage supply chain operations and assist REE in assembling its REEcorner and REE P7 electric trucks. With Motherson’s buying power, manufacturing capabilities and industry connections, REE aims to accelerate production to meet rising demand and expected fleet orders from major multinational clients. REE has also raised $45.35 million from investors to support its operations.

This company is expected to post quarterly loss of $1.45 per share in its upcoming report, which represents a year-over-year change of +31%. Revenues are expected to be $0.6 million, down 36.2% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For REE Automotive, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock’s price usually doesn’t keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on REE 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 >>>>

REE Automotive belongs to the Zacks Automotive – Original Equipment industry. Another stock from the same industry, American Axle & Manufacturing (AXL), closed the last trading session 0.8% lower at $6.08. Over the past month, AXL has returned -3.2%.

For American Axle, the consensus EPS estimate for the upcoming report has changed -16.5% over the past month to $0.03. This represents a change of +127.3% from what the company reported a year ago. American Axle currently has a Zacks Rank of #3 (Hold).

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