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Encore Wire (WIRE) Hits Fresh High: Is There Still Room to Run?
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Shares of Encore Wire (WIRE - Free Report) have been strong performers lately, with the stock up 32.5% over the past month. The stock hit a new 52-week high of $146.99 in the previous session. Encore Wire has gained 142.1% since the start of the year compared to the 17.8% move for the Zacks Industrial Products sector and the 113.3% return for the Zacks Wire and Cable Products industry.
What's Driving the Outperformance?
The stock has an impressive 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 October 26, 2021, Encore Wire reported EPS of $8.51 versus consensus estimate of $2.82.
Valuation Metrics
Encore Wire 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 has run ahead of itself.
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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Encore Wire has a Value Score of B. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 6.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 31.7X versus its peer group's average of 13X. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Encore Wire currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
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 Encore Wire passes the test. Thus, it seems as though Encore Wire shares could have a bit more room to run in the near term.
How Does Encore Wire Stack Up to the Competition?
Shares of Encore Wire have been soaring, 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 impressive, including Ituran Location and Control (ITRN - Free Report) , Global Industrial (GIC - Free Report) , and Horiba (HRIBF - 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 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Encore Wire, even beyond its own solid fundamental situation.
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Encore Wire (WIRE) Hits Fresh High: Is There Still Room to Run?
Shares of Encore Wire (WIRE - Free Report) have been strong performers lately, with the stock up 32.5% over the past month. The stock hit a new 52-week high of $146.99 in the previous session. Encore Wire has gained 142.1% since the start of the year compared to the 17.8% move for the Zacks Industrial Products sector and the 113.3% return for the Zacks Wire and Cable Products industry.
What's Driving the Outperformance?
The stock has an impressive 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 October 26, 2021, Encore Wire reported EPS of $8.51 versus consensus estimate of $2.82.
Valuation Metrics
Encore Wire 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 has run ahead of itself.
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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Encore Wire has a Value Score of B. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 6.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 31.7X versus its peer group's average of 13X. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Encore Wire currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.
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 Encore Wire passes the test. Thus, it seems as though Encore Wire shares could have a bit more room to run in the near term.
How Does Encore Wire Stack Up to the Competition?
Shares of Encore Wire have been soaring, 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 impressive, including Ituran Location and Control (ITRN - Free Report) , Global Industrial (GIC - Free Report) , and Horiba (HRIBF - 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 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Encore Wire, even beyond its own solid fundamental situation.