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Bull Of The Day: Holley (HLLY)

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Holley (HLLY - Free Report) is a Zacks Rank #1 (Buy) and it sports an B for Value and a C for Growth. This stock just reported a solid quarter and the stock is soaring as a result.  Let’s explore more about this company in this Bull of The Day article.

Description

Holley is a leading designer, marketer, and manufacturer of high-performance automotive aftermarket products for car and truck enthusiasts. Holley offers the largest portfolio of iconic brands that deliver innovation and inspiration to a large and diverse community of millions of avid automotive enthusiasts who are passionate about the performance and the personalization of their classic and modern cars. Holley has disrupted the performance aftermarket category by putting the enthusiast consumer first, developing innovative new products, and building a robust M&A process that has added meaningful scale and diversity to its platform.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

For Holley, I see two beats of the Zacks Consensus Estimate and two misses over the last calendar year.  That is great to see, but by itself that is not enough to make the company a Zacks Rank #1 (Strong Buy).

Earnings Estimates Revisions

The Zacks Rank tells us which stocks are seeing earnings estimates move higher. 

Over the last 30 days, earning estimates have increased for HLLY.

The current quarter has seen a move from 2 cents to 3 cents.

Next quarter has held still at 2 cents..     

The full year numbers are certainly more important… and they are moving higher.

This year has moved from $0.14 to $0.17

Next year is now at $0.31 move up from $0.26.

Valuation

The valuation is a little high with the stock trading at 44x forward estimates with the industry average coming in at 23x. Price to book of 2.1x is well below the 3.7 industry average. Price to sales is at 1.3x and that is right in line with the industry average.

The stock has really soared after the most recent earnings report. The company beat the Zacks Consensus of $0.06 by $0.08 when they reported $0.14.   The valuation is stretched a little here, but the implication is that there will be a lot of growth going forward.  Combine that with some margin improvement and the EPS numbers will continue to grow.


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