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Model N, Inc. (MODN) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Model N (MODN - Free Report) ? Shares have been on the move with the stock up 1% over the past month. The stock hit a new 52-week high of $43.17 in the previous session. Model N has gained 3.6% since the start of the year compared to the -31.6% move for the Zacks Computer and Technology sector and the -57.6% return for the Zacks Internet - Software 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 November 8, 2022, Model N reported EPS of $0.2 versus consensus estimate of $0.19.
For the current fiscal year, Model N is expected to post earnings of $0.93 per share on $241.93 million in revenues. This represents a 29.17% change in EPS on a 10.39% change in revenues. For the next fiscal year, the company is expected to earn $0.97 per share on $271.28 million in revenues. This represents a year-over-year change of 4.3% and 12.13%, respectively.
Valuation Metrics
Model N 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 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. 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.
Model N has a Value Score of D. 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 45.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 41.4X. On a trailing cash flow basis, the stock currently trades at 104X versus its peer group's average of 19.3X. 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, Model N 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 Model N passes the test. Thus, it seems as though Model N shares could still be poised for more gains ahead.
How Does MODN Stack Up to the Competition?
Shares of MODN 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 StoneCo Ltd. (STNE - Free Report) . STNE has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. StoneCo Ltd. beat our consensus estimate by 66.67%, and for the current fiscal year, STNE is expected to post earnings of $0.58 per share on revenue of $813.95 million.
Shares of StoneCo Ltd. have gained 7.7% over the past month, and currently trade at a forward P/E of 16.69X and a P/CF of 22.97X.
The Internet - Software industry is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MODN and STNE, even beyond their own solid fundamental situation.
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Model N, Inc. (MODN) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Model N (MODN - Free Report) ? Shares have been on the move with the stock up 1% over the past month. The stock hit a new 52-week high of $43.17 in the previous session. Model N has gained 3.6% since the start of the year compared to the -31.6% move for the Zacks Computer and Technology sector and the -57.6% return for the Zacks Internet - Software 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 November 8, 2022, Model N reported EPS of $0.2 versus consensus estimate of $0.19.
For the current fiscal year, Model N is expected to post earnings of $0.93 per share on $241.93 million in revenues. This represents a 29.17% change in EPS on a 10.39% change in revenues. For the next fiscal year, the company is expected to earn $0.97 per share on $271.28 million in revenues. This represents a year-over-year change of 4.3% and 12.13%, respectively.
Valuation Metrics
Model N 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 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. 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.
Model N has a Value Score of D. 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 45.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 41.4X. On a trailing cash flow basis, the stock currently trades at 104X versus its peer group's average of 19.3X. 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, Model N 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 Model N passes the test. Thus, it seems as though Model N shares could still be poised for more gains ahead.
How Does MODN Stack Up to the Competition?
Shares of MODN 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 StoneCo Ltd. (STNE - Free Report) . STNE has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. StoneCo Ltd. beat our consensus estimate by 66.67%, and for the current fiscal year, STNE is expected to post earnings of $0.58 per share on revenue of $813.95 million.
Shares of StoneCo Ltd. have gained 7.7% over the past month, and currently trade at a forward P/E of 16.69X and a P/CF of 22.97X.
The Internet - Software industry is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MODN and STNE, even beyond their own solid fundamental situation.