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Harmonic Inc. (HLIT) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Harmonic (HLIT - Free Report) ? Shares have been on the move with the stock up 25.2% over the past month. The stock hit a new 52-week high of $13.87 in the previous session. Harmonic has gained 16.2% since the start of the year compared to the -37.2% move for the Zacks Computer and Technology sector and the -28% return for the Zacks Communication - Components 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 1, 2022, Harmonic reported EPS of $0.16 versus consensus estimate of $0.09 while it beat the consensus revenue estimate by 4.82%.
For the current fiscal year, Harmonic is expected to post earnings of $0.48 per share on $618.73 million in revenues. This represents a 41.18% change in EPS on a 22% change in revenues. For the next fiscal year, the company is expected to earn $0.70 per share on $710.9 million in revenues. This represents a year-over-year change of 46.53% and 14.9%, respectively.
Valuation Metrics
Harmonic 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 these give investors a variety of ways to comb 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.
Harmonic has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 28.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.7X. On a trailing cash flow basis, the stock currently trades at 41.9X versus its peer group's average of 13.5X. 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, Harmonic currently has a Zacks Rank of #2 (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 Harmonic passes the test. Thus, it seems as though Harmonic shares could still be poised for more gains ahead.
How Does HLIT Stack Up to the Competition?
Shares of HLIT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ooma, Inc. (OOMA - Free Report) . OOMA has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Ooma, Inc. beat our consensus estimate by 20%, and for the current fiscal year, OOMA is expected to post earnings of $0.47 per share on revenue of $216.81 million.
Shares of Ooma, Inc. have gained 18.6% over the past month, and currently trade at a forward P/E of 30.62X and a P/CF of 85.28X.
The Communication - Components industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HLIT and OOMA, even beyond their own solid fundamental situation.
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Harmonic Inc. (HLIT) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Harmonic (HLIT - Free Report) ? Shares have been on the move with the stock up 25.2% over the past month. The stock hit a new 52-week high of $13.87 in the previous session. Harmonic has gained 16.2% since the start of the year compared to the -37.2% move for the Zacks Computer and Technology sector and the -28% return for the Zacks Communication - Components 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 1, 2022, Harmonic reported EPS of $0.16 versus consensus estimate of $0.09 while it beat the consensus revenue estimate by 4.82%.
For the current fiscal year, Harmonic is expected to post earnings of $0.48 per share on $618.73 million in revenues. This represents a 41.18% change in EPS on a 22% change in revenues. For the next fiscal year, the company is expected to earn $0.70 per share on $710.9 million in revenues. This represents a year-over-year change of 46.53% and 14.9%, respectively.
Valuation Metrics
Harmonic 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 these give investors a variety of ways to comb 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.
Harmonic has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 28.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 16.7X. On a trailing cash flow basis, the stock currently trades at 41.9X versus its peer group's average of 13.5X. 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, Harmonic currently has a Zacks Rank of #2 (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 Harmonic passes the test. Thus, it seems as though Harmonic shares could still be poised for more gains ahead.
How Does HLIT Stack Up to the Competition?
Shares of HLIT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Ooma, Inc. (OOMA - Free Report) . OOMA has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Ooma, Inc. beat our consensus estimate by 20%, and for the current fiscal year, OOMA is expected to post earnings of $0.47 per share on revenue of $216.81 million.
Shares of Ooma, Inc. have gained 18.6% over the past month, and currently trade at a forward P/E of 30.62X and a P/CF of 85.28X.
The Communication - Components industry is in the top 14% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HLIT and OOMA, even beyond their own solid fundamental situation.