Shares of Comfort Systems USA (
FIX Quick Quote FIX - Free Report) have been strong performers lately, with the stock up 8.1% over the past month. The stock hit a new 52-week high of $83.35 in the previous session. Comfort Systems USA has gained 56.1% since the start of the year compared to the 24.9% move for the Zacks Construction sector and the 26.9% return for the Zacks Building Products - Air Conditioner and Heating 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 April 28, 2021, Comfort Systems reported EPS of $0.73 versus consensus estimate of $0.56 while it missed the consensus revenue estimate by 3.63%.
For the current fiscal year, Comfort Systems is expected to post earnings of $3.67 per share on $2.9 billion in revenues. This represents a -10.27% change in EPS on a 1.66% change in revenues. For the next fiscal year, the company is expected to earn $3.98 per share on $3.03 billion in revenues. This represents a year-over-year change of 8.45% and 4.24%, respectively.
Comfort Systems 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 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.
Comfort Systems has a Value Score of B. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.4X 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 33.7X. 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, Comfort Systems currently has a Zacks Rank of #1 (Strong 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 Comfort Systems fits the bill. Thus, it seems as though Comfort Systems shares could have potential in the weeks and months to come.
How Does Comfort Systems Stack Up to the Competition?
Shares of Comfort Systems 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 impressive, including Lennox International (
LII Quick Quote LII - Free Report) , Owens Corning ( OC Quick Quote OC - Free Report) , and Advanced Drainage Systems ( WMS Quick Quote WMS - 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 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Comfort Systems, even beyond its own solid fundamental situation.