Back to top

Image: Bigstock

Koppers (KOP) Hits 52-Week High, Can the Run Continue?

Read MoreHide Full Article

Shares of Koppers Holdings (KOP - Free Report) have been strong performers lately, with the stock up 52.2% over the past month. The stock hit a new 52-week high of $40.72 in the previous session. Koppers Holdings has gained 138.9% since the start of the year compared to the 11.8% move for the Zacks Basic Materials sector and the 5.9% return for the Zacks Chemical - Diversified 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 7, 2019, Koppers reported EPS of $1.24 versus consensus estimate of $0.98 while it missed the consensus revenue estimate by 2.11%.

For the current fiscal year, Koppers is expected to post earnings of $3.36 per share on $1.81 billion in revenues. This represents a -4% change in EPS on a 6.11% change in revenues. For the next fiscal year, the company is expected to earn $4.28 per share on $1.89 billion in revenues. This represents a year-over-year change of 27.6% and 4.39%, respectively.

Valuation Metrics

Koppers 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 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.

Koppers has a Value Score of A. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 6.7X versus its peer group's average of 6.9X. Additionally, the stock has a PEG ratio of 0.67. 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, Koppers 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 Koppers fits the bill. Thus, it seems as though Koppers shares could still be poised for more gains ahead.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


Koppers Holdings Inc. (KOP) - free report >>

Published in