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Rush Enterprises (RUSHA) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of Rush Enterprises (RUSHA - Free Report) ? Shares have been on the move with the stock up 11.7% over the past month. The stock hit a new 52-week high of $47.5 in the previous session. Rush Enterprises has gained 13.8% since the start of the year compared to the -1.6% move for the Zacks Retail-Wholesale sector and the 30.5% return for the Zacks Automotive - Retail and Whole Sales 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 February 10, 2021, Rush Enterprises reported EPS of $0.72 versus consensus estimate of $0.61.

Valuation Metrics

While Rush Enterprises has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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.

Rush Enterprises 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 16.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 8.9X versus its peer group's average of 9.6X. Additionally, the stock has a PEG ratio of 1.09. 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, Rush Enterprises 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 Rush Enterprises passes the test. Thus, it seems as though Rush Enterprises shares could have a bit more room to run in the near term.


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