Have you been paying attention to shares of AXT (
AXTI Quick Quote AXTI - Free Report) ? Shares have been on the move with the stock up 7.5% over the past month. The stock hit a new 52-week high of $6.98 in the previous session. AXT has gained 55.9% since the start of the year compared to the 30.5% move for the Zacks Computer and Technology sector and the 36.7% return for the Zacks Electronics - Semiconductors 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 October 28, 2020, AXT reported EPS of $0.02 versus consensus estimate of $0.
For the current fiscal year, AXT is expected to post earnings of $0.05 per share on $93.85 million in revenues. This represents a 185.71% change in EPS on a 12.73% change in revenues. For the next fiscal year, the company is expected to earn $0.18 per share on $108.24 million in revenues. This represents a year-over-year change of 213.88% and 15.33%, respectively.
AXT 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.
AXT has a Value Score of D. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 123.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 91.9X versus its peer group's average of 16X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, AXT 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 AXT passes the test. Thus, it seems as though AXT shares could have potential in the weeks and months to come.
How Does AXT Stack Up to the Competition?
Shares of AXT have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Silicon Motion Technology (
SIMO Quick Quote SIMO - Free Report) , DIALOG SEMICON ( DLGNF Quick Quote DLGNF - Free Report) , and Synaptics ( SYNA Quick Quote SYNA - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 28% of all the industries we have in our universe, so it looks like there are some nice tailwinds for AXT, even beyond its own solid fundamental situation.