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Encore Wire (WIRE) Hits 52-Week High, Can the Run Continue?
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Shares of Encore Wire have been strong performers lately, with the stock up 27.7% over the past month. The stock hit a new 52-week high of $88.3 in the previous session. Encore Wire has gained 45.7% since the start of the year compared to the 17.6% move for the Zacks Industrial Products sector and the 76.3% return for the Zacks Wire and Cable Products 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 27, 2021, Encore Wire reported EPS of $8.82 versus consensus estimate of $1.14.
Valuation Metrics
While Encore Wire 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.
Encore Wire has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 5.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 19.1X versus its peer group's average of 18.9X. 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, Encore Wire 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 Encore Wire fits the bill. Thus, it seems as though Encore Wire shares could have potential in the weeks and months to come.
How Does Encore Wire Stack Up to the Competition?
Shares of Encore Wire have been soaring, 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 looking good, including Belden (BDC - Free Report) , Albany International (AIN - Free Report) , and SiteOne Landscape Supply (SITE - 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 1% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Encore Wire, even beyond its own solid fundamental situation.
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Encore Wire (WIRE) Hits 52-Week High, Can the Run Continue?
Shares of Encore Wire have been strong performers lately, with the stock up 27.7% over the past month. The stock hit a new 52-week high of $88.3 in the previous session. Encore Wire has gained 45.7% since the start of the year compared to the 17.6% move for the Zacks Industrial Products sector and the 76.3% return for the Zacks Wire and Cable Products 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 27, 2021, Encore Wire reported EPS of $8.82 versus consensus estimate of $1.14.
Valuation Metrics
While Encore Wire 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.
Encore Wire has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 5.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 19.1X versus its peer group's average of 18.9X. 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, Encore Wire 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 Encore Wire fits the bill. Thus, it seems as though Encore Wire shares could have potential in the weeks and months to come.
How Does Encore Wire Stack Up to the Competition?
Shares of Encore Wire have been soaring, 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 looking good, including Belden (BDC - Free Report) , Albany International (AIN - Free Report) , and SiteOne Landscape Supply (SITE - 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 1% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Encore Wire, even beyond its own solid fundamental situation.