Teck Resources (TECK) surges 11.3%: Is this an indication of further gains?

Zacks Zacks Investment Research

Teck Resources Ltd (TECK - Free Report) shares ended the last trading session 11.3% higher at $39.07. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 8.7% gain over the past four weeks.

Shares of Teck Resources jumped since it announced that it has entered into a merger agreement with Anglo American plc (NGLOY - Free Report) to form Anglo Teck group. This merger is expected to create a global critical minerals leader and be highly attractive for both Teck Resources and Anglo American shareholders.

Anglo Teck will have more than 70% exposure to copper and set to be among the top five global copper producers. The combined annual copper production of 1.2 million tons is projected to grow by 10% to 1.35 million tons by 2027. Within four years of completion, the deal is expected to yield around $800 million in annual pre-tax synergies. Around 80% of this is expected to be achieved within two years through economies of scale and operational efficiencies.

This company is expected to post quarterly earnings of $0.44 per share in its upcoming report, which represents no change from the year-ago quarter. Revenues are expected to be $2.21 billion, up 5.7% 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 Teck Resources, the consensus EPS estimate for the quarter has been revised 11.5% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on TECK 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).

Teck Resources belongs to the Zacks Mining - Miscellaneous industry. Another stock from the same industry, Nexa Resources S.A. (NEXA - Free Report) , closed the last trading session 1.4% lower at $4.8. Over the past month, NEXA has returned -0.6%.

For Nexa Resources, the consensus EPS estimate for the upcoming report has changed +25% over the past month to $0.1. This represents a change of +400% from what the company reported a year ago. Nexa Resources currently has a Zacks Rank of #3 (Hold).

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