Shares of Omnicell (
OMCL Quick Quote OMCL - Free Report) have been strong performers lately, with the stock up 1% over the past month. The stock hit a new 52-week high of $155.65 in the previous session. Omnicell has gained 27.5% since the start of the year compared to the 0.5% move for the Zacks Medical sector and the -25.3% return for the Zacks Medical Info Systems 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 July 29, 2021, Omnicell reported EPS of $0.97 versus consensus estimate of $0.8 while it beat the consensus revenue estimate by 2.07%.
For the current fiscal year, Omnicell is expected to post earnings of $3.69 per share on $1.11 billion in revenues. This represents a 45.28% change in EPS on a 24.62% change in revenues. For the next fiscal year, the company is expected to earn $4.07 per share on $1.26 billion in revenues. This represents a year-over-year change of 10.46% and 13.58%, respectively.
Omnicell 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.
Omnicell has a Value Score of D. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 41.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 42.1X versus its peer group's average of 17X. Additionally, the stock has a PEG ratio of 3.46. 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, Omnicell currently has a Zacks Rank of #2 (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 Omnicell meets the list of requirements. Thus, it seems as though Omnicell shares could have potential in the weeks and months to come.
How Does Omnicell Stack Up to the Competition?
Shares of Omnicell 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 solid potential picks, including Computer Programs and Systems (
CPSI Quick Quote CPSI - Free Report) , GN STORE NORD ( GNNDY Quick Quote GNNDY - Free Report) , and SARTORIUS ( SARTF Quick Quote SARTF - 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 Omnicell. Still, the fundamentals for Omnicell are promising, and it still has potential despite being at a 52-week high.