Have you been paying attention to shares of Covenant Logistics Group (CVLG - Free Report) ? Shares have been on the move with the stock up 17.9% over the past month. The stock hit a new 52-week high of $27.04 in the previous session. Covenant Logistics Group has gained 82.4% since the start of the year compared to the 4.7% move for the Zacks Transportation sector and the 35% return for the Zacks Transportation - Truck 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 July 21, 2021, Covenant Logistics reported EPS of $0.96 versus consensus estimate of $0.64 while it beat the consensus revenue estimate by 14.94%.
For the current fiscal year, Covenant Logistics is expected to post earnings of $3.43 per share on $994.7 million in revenues. This represents a 217.59% change in EPS on a 18.23% change in revenues. For the next fiscal year, the company is expected to earn $3.5 per share on $1.04 billion in revenues. This represents a year-over-year change of 2.04% and 4.76%, respectively.
Valuation Metrics
Covenant Logistics 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. 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.
Covenant Logistics has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 5.5X versus its peer group's average of 8.3X. 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, Covenant Logistics 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 Covenant Logistics fits the bill. Thus, it seems as though Covenant Logistics shares could have a bit more room to run in the near term.
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Have you been paying attention to shares of Covenant Logistics Group (CVLG - Free Report) ? Shares have been on the move with the stock up 17.9% over the past month. The stock hit a new 52-week high of $27.04 in the previous session. Covenant Logistics Group has gained 82.4% since the start of the year compared to the 4.7% move for the Zacks Transportation sector and the 35% return for the Zacks Transportation - Truck 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 July 21, 2021, Covenant Logistics reported EPS of $0.96 versus consensus estimate of $0.64 while it beat the consensus revenue estimate by 14.94%.
For the current fiscal year, Covenant Logistics is expected to post earnings of $3.43 per share on $994.7 million in revenues. This represents a 217.59% change in EPS on a 18.23% change in revenues. For the next fiscal year, the company is expected to earn $3.5 per share on $1.04 billion in revenues. This represents a year-over-year change of 2.04% and 4.76%, respectively.
Valuation Metrics
Covenant Logistics 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. 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.
Covenant Logistics has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 5.5X versus its peer group's average of 8.3X. 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, Covenant Logistics 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 Covenant Logistics fits the bill. Thus, it seems as though Covenant Logistics shares could have a bit more room to run in the near term.
Infrastructure Stock Boom to Sweep America
A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made.
The only question is “Will you get into the right stocks early when their growth potential is greatest?”
Zacks has released a Special Report to help you do just that, and today it’s free. Discover 5 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.
Download FREE: How To Profit From Trillions On Spending For Infrastructure >>
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