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Green Brick Partners (GRBK) Hits 52-Week High, Can the Run Continue?

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Have you been paying attention to shares of Green Brick Partners (GRBK - Free Report) ? Shares have been on the move with the stock up 18.6% over the past month. The stock hit a new 52-week high of $18.85 in the previous session. Green Brick Partners has gained 60.9% since the start of the year compared to the -13.5% move for the Zacks Finance sector and the -14.7% return for the Zacks Real Estate - Development industry.

What's Driving the Outperformance?

The stock has an impressive 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 4, 2020, Green Brick Partners reported EPS of $0.66 versus consensus estimate of $0.46.

For the current fiscal year, Green Brick Partners is expected to post earnings of $2.12 per share on $856.78 million in revenues. This represents an 82.76% change in EPS on an 8.23% change in revenues. For the next fiscal year, the company is expected to earn $2.04 per share on $990.78 million in revenues. This represents a year-over-year change of -3.77% and 15.64%, respectively.

Valuation Metrics

Green Brick Partners 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.

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

In terms of its value breakdown, the stock currently trades at 8.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.1X versus its peer group's average of 10.3X. 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, Green Brick Partners currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

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 Green Brick Partners fits the bill. Thus, it seems as though Green Brick Partners shares could still be poised for more gains ahead.


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