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Boise Cascade (BCC) Hits Fresh High: Is There Still Room to Run?

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Shares of Boise Cascade, L.L.C. (BCC - Free Report) have been strong performers lately, with the stock up 15.6% over the past month. The stock hit a new 52-week high of $64.13 in the previous session. Boise Cascade, L.L.C. has gained 28.2% since the start of the year compared to the 18.5% move for the Zacks Construction sector and the 16.5% return for the Zacks Building Products - Wood 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 February 22, 2021, Boise Cascade reported EPS of $1.76 versus consensus estimate of $1.1.

Valuation Metrics

While Boise Cascade 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Boise Cascade has a Value Score of A. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 12.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.4X versus its peer group's average of 14.3X. Additionally, the stock has a PEG ratio of 1.18. 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, Boise Cascade 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 Boise Cascade passes the test. Thus, it seems as though Boise Cascade shares could have potential in the weeks and months to come.


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