Have you been paying attention to shares of Extreme Networks (EXTR - Free Report) ? Shares have been on the move with the stock up 14.9% over the past month. The stock hit a new 52-week high of $32.73 in the previous session. Extreme Networks has gained 73.2% since the start of the year compared to the 36.2% move for the Zacks Computer and Technology sector and the 13.7% return for the Zacks Computer - Networking 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 August 2, 2023, Extreme Networks reported EPS of $0.33 versus consensus estimate of $0.31.
For the current fiscal year, Extreme Networks is expected to post earnings of $1.54 per share on $1.5 billion in revenues. This represents a 42.2% change in EPS on a 14.36% change in revenues. For the next fiscal year, the company is expected to earn $2 per share on $1.69 billion in revenues. This represents a year-over-year change of 29.35% and 12.8%, respectively.
Valuation Metrics
Extreme Networks 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Extreme Networks has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.2X. On a trailing cash flow basis, the stock currently trades at 27.9X versus its peer group's average of 12.5X. Additionally, the stock has a PEG ratio of 1.21. 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, Extreme Networks 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 Extreme Networks fits the bill. Thus, it seems as though Extreme Networks shares could have potential in the weeks and months to come.
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Have you been paying attention to shares of Extreme Networks (EXTR - Free Report) ? Shares have been on the move with the stock up 14.9% over the past month. The stock hit a new 52-week high of $32.73 in the previous session. Extreme Networks has gained 73.2% since the start of the year compared to the 36.2% move for the Zacks Computer and Technology sector and the 13.7% return for the Zacks Computer - Networking 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 August 2, 2023, Extreme Networks reported EPS of $0.33 versus consensus estimate of $0.31.
For the current fiscal year, Extreme Networks is expected to post earnings of $1.54 per share on $1.5 billion in revenues. This represents a 42.2% change in EPS on a 14.36% change in revenues. For the next fiscal year, the company is expected to earn $2 per share on $1.69 billion in revenues. This represents a year-over-year change of 29.35% and 12.8%, respectively.
Valuation Metrics
Extreme Networks 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Extreme Networks has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.2X. On a trailing cash flow basis, the stock currently trades at 27.9X versus its peer group's average of 12.5X. Additionally, the stock has a PEG ratio of 1.21. 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, Extreme Networks 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 Extreme Networks fits the bill. Thus, it seems as though Extreme Networks shares could have potential in the weeks and months to come.
4 Oil Stocks with Massive Upsides
Global demand for oil is through the roof... and oil producers are struggling to keep up. So even though oil prices are well off their recent highs, you can expect big profits from the companies that supply the world with "black gold."
Zacks Investment Research has just released an urgent special report to help you bank on this trend.
In Oil Market on Fire, you'll discover 4 unexpected oil and gas stocks positioned for big gains in the coming weeks and months. You don't want to miss these recommendations.
Download your free report now to see them.
Get the latest research report on EXTR - FREE