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Super Micro Computer, Inc. (SMCI) Hits Fresh High: Is There Still Room to Run?
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Have you been paying attention to shares of Super Micro Computer (SMCI - Free Report) ? Shares have been on the move with the stock up 33.7% over the past month. The stock hit a new 52-week high of $85.95 in the previous session. Super Micro Computer has gained 83.9% since the start of the year compared to the -37% move for the Zacks Computer and Technology sector and the -28.2% return for the Zacks Computer- Storage Devices 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 November 1, 2022, Super Micro reported EPS of $3.42 versus consensus estimate of $3.13 while it beat the consensus revenue estimate by 2.9%.
Valuation Metrics
Super Micro 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.
Super Micro has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 10.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 15.8X. On a trailing cash flow basis, the stock currently trades at 13.2X 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Super Micro 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 Super Micro fits the bill. Thus, it seems as though Super Micro shares could have a bit more room to run in the near term.
How Does SMCI Stack Up to the Competition?
Shares of SMCI 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 Pure Storage, Inc. (PSTG - Free Report) . PSTG has a Zacks Rank of # 2 (Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Pure Storage, Inc. beat our consensus estimate by 45.45%, and for the current fiscal year, PSTG is expected to post earnings of $1.18 per share on revenue of $2.75 billion.
Shares of Pure Storage, Inc. have gained 6.6% over the past month, and currently trade at a forward P/E of 26.19X and a P/CF of 95.95X.
The Computer- Storage Devices industry is in the top 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SMCI and PSTG, even beyond their own solid fundamental situation.
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Super Micro Computer, Inc. (SMCI) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Super Micro Computer (SMCI - Free Report) ? Shares have been on the move with the stock up 33.7% over the past month. The stock hit a new 52-week high of $85.95 in the previous session. Super Micro Computer has gained 83.9% since the start of the year compared to the -37% move for the Zacks Computer and Technology sector and the -28.2% return for the Zacks Computer- Storage Devices 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 November 1, 2022, Super Micro reported EPS of $3.42 versus consensus estimate of $3.13 while it beat the consensus revenue estimate by 2.9%.
Valuation Metrics
Super Micro 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.
Super Micro has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 10.1X current fiscal year EPS estimates, which is not in-line with the peer industry average of 15.8X. On a trailing cash flow basis, the stock currently trades at 13.2X 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Super Micro 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 Super Micro fits the bill. Thus, it seems as though Super Micro shares could have a bit more room to run in the near term.
How Does SMCI Stack Up to the Competition?
Shares of SMCI 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 Pure Storage, Inc. (PSTG - Free Report) . PSTG has a Zacks Rank of # 2 (Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Pure Storage, Inc. beat our consensus estimate by 45.45%, and for the current fiscal year, PSTG is expected to post earnings of $1.18 per share on revenue of $2.75 billion.
Shares of Pure Storage, Inc. have gained 6.6% over the past month, and currently trade at a forward P/E of 26.19X and a P/CF of 95.95X.
The Computer- Storage Devices industry is in the top 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SMCI and PSTG, even beyond their own solid fundamental situation.