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Veritiv (VRTV) Soars to 52-Week High, Time to Cash Out?
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Shares of Veritiv have been strong performers lately, with the stock up 47.2% over the past month. The stock hit a new 52-week high of $88.33 in the previous session. Veritiv has gained 324.6% since the start of the year compared to the 16.7% move for the Zacks Basic Materials sector and the 20.2% return for the Zacks Paper and Related Products industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 9, 2021, Veritiv reported EPS of $1.87 versus consensus estimate of $0.81.
Valuation Metrics
Veritiv may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Veritiv has a Value Score of B. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 13.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11.7X versus its peer group's average of 9.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Veritiv currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Veritiv fits the bill. Thus, it seems as though Veritiv shares could have a bit more room to run in the near term.
How Does Veritiv Stack Up to the Competition?
Shares of Veritiv have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Clearwater Paper (CLW - Free Report) , MONDI PLC UNS (MONDY - Free Report) , and SMURFIT KAPPA (SMFKY - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Veritiv, even beyond its own solid fundamental situation.
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Veritiv (VRTV) Soars to 52-Week High, Time to Cash Out?
Shares of Veritiv have been strong performers lately, with the stock up 47.2% over the past month. The stock hit a new 52-week high of $88.33 in the previous session. Veritiv has gained 324.6% since the start of the year compared to the 16.7% move for the Zacks Basic Materials sector and the 20.2% return for the Zacks Paper and Related Products industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on August 9, 2021, Veritiv reported EPS of $1.87 versus consensus estimate of $0.81.
Valuation Metrics
Veritiv may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Veritiv has a Value Score of B. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 13.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11.7X versus its peer group's average of 9.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Veritiv currently has a Zacks Rank of #1 (Strong Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Veritiv fits the bill. Thus, it seems as though Veritiv shares could have a bit more room to run in the near term.
How Does Veritiv Stack Up to the Competition?
Shares of Veritiv have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Clearwater Paper (CLW - Free Report) , MONDI PLC UNS (MONDY - Free Report) , and SMURFIT KAPPA (SMFKY - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 21% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Veritiv, even beyond its own solid fundamental situation.