Shares of NN (
NNBR Quick Quote NNBR - Free Report) have been strong performers lately, with the stock up 11.2% over the past month. The stock hit a new 52-week high of $8.51 in the previous session. NN has gained 19% since the start of the year compared to the 35% move for the Zacks Industrial Products sector and the 20.4% return for the Zacks Metal Products - Procurement and Fabrication 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 March 11, 2021, NN reported EPS of $0.17 versus consensus estimate of $-0.04 while it beat the consensus revenue estimate by 7.81%.
For the current fiscal year, NN is expected to post earnings of $0.3 per share on $466.92 million in revenues. This represents a 306.25% change in EPS on a -19.9% change in revenues. For the next fiscal year, the company is expected to earn $0.45 per share on $476.34 million in revenues. This represents a year-over-year change of 55.56% and 2.02%, respectively.
Though NN has recently hit a 52-week high, what is next for NN? 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 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.
NN 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 26.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 2.7X versus its peer group's average of 9.3X. 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, NN 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 NN passes the test. Thus, it seems as though NN shares could have a bit more room to run in the near term.
How Does NN Stack Up to the Competition?
Shares of NN have been moving higher, 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 impressive, including Norsk Hydro ASA (
NHYDY Quick Quote NHYDY - Free Report) , Worthington Industries ( WOR Quick Quote WOR - Free Report) , and Timken Company The ( TKR Quick Quote TKR - 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.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for NN. Still, the fundamentals for NN are promising, and it still has potential despite being at a 52-week high.