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NetApp (NTAP) Soars to a 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of NetApp (NTAP - Free Report) ? Shares have been on the move with the stock up 14.9% over the past month. NTAP hit a new 52-week high of $79.75 in the previous session. NetApp has gained 42% since the start of the year compared to the 5.6% move for the Computer and Technology sector and the 19% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 23, 2018, NetApp reported EPS of $1.05 versus consensus estimate of $1.01 while it beat the consensus revenue estimate by 2.86%.
For the current fiscal year, NetApp is expected to post earnings of $3.54 per share on $6.19 billion in revenues. This represents a 16.71% change in EPS on a 4.77% change in revenues. For the next fiscal year, the company is expected to earn $4.03 per share on $6.51 billion in revenues. This represents a year-over-year change of 16.15% and 5.13%, respectively.
Valuation Metrics
NetApp may be at a 52-week high right now, but what might the future hold for NTAP? 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
NetApp has a Value Score of D. 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 22.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20.6X versus its peer group's average of 13.5X. Additionally, the stock has a PEG ratio of 1.6. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, NetApp 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 or 2 (Buy) and Style Scores of A or B, it looks as if NetApp passes the test. Thus, it seems as though NTAP shares could have potential in the weeks and months to come.
How Does NetApp Stack Up to the Competition?
Shares of NetApp 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 Super Micro Computer (SMCI - Free Report) , Seagate Technology (STX - Free Report) , and Western Digital (WDC - 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 7% of all the industries we have in our universe, so it looks like there are some nice tailwinds for NTAP, even beyond its own solid fundamental situation.
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NetApp (NTAP) Soars to a 52-Week High, Time to Cash Out?
Have you been paying attention to shares of NetApp (NTAP - Free Report) ? Shares have been on the move with the stock up 14.9% over the past month. NTAP hit a new 52-week high of $79.75 in the previous session. NetApp has gained 42% since the start of the year compared to the 5.6% move for the Computer and Technology sector and the 19% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 23, 2018, NetApp reported EPS of $1.05 versus consensus estimate of $1.01 while it beat the consensus revenue estimate by 2.86%.
For the current fiscal year, NetApp is expected to post earnings of $3.54 per share on $6.19 billion in revenues. This represents a 16.71% change in EPS on a 4.77% change in revenues. For the next fiscal year, the company is expected to earn $4.03 per share on $6.51 billion in revenues. This represents a year-over-year change of 16.15% and 5.13%, respectively.
Valuation Metrics
NetApp may be at a 52-week high right now, but what might the future hold for NTAP? 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
NetApp has a Value Score of D. 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 22.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20.6X versus its peer group's average of 13.5X. Additionally, the stock has a PEG ratio of 1.6. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
NetApp, Inc. Price and Consensus
NetApp, Inc. Price and Consensus | NetApp, Inc. Quote
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, NetApp 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 or 2 (Buy) and Style Scores of A or B, it looks as if NetApp passes the test. Thus, it seems as though NTAP shares could have potential in the weeks and months to come.
How Does NetApp Stack Up to the Competition?
Shares of NetApp 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 Super Micro Computer (SMCI - Free Report) , Seagate Technology (STX - Free Report) , and Western Digital (WDC - 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 7% of all the industries we have in our universe, so it looks like there are some nice tailwinds for NTAP, even beyond its own solid fundamental situation.