Shares of Forrester Research (
FORR Quick Quote FORR - Free Report) have been strong performers lately, with the stock up 6.4% over the past month. The stock hit a new 52-week high of $48.87 in the previous session. Forrester Research has gained 16.4% since the start of the year compared to the 27.7% move for the Zacks Computer and Technology sector and the 10.8% return for the Zacks Computer - Services 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 28, 2021, Forrester Research reported EPS of $0.66 versus consensus estimate of $0.56.
For the current fiscal year, Forrester Research is expected to post earnings of $1.81 per share on $490.46 million in revenues. This represents a 13.13% change in EPS on a 9.24% change in revenues. For the next fiscal year, the company is expected to earn $2.17 per share on $528 million in revenues. This represents a year-over-year change of 19.89% and 7.65%, respectively.
Forrester Research 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Forrester Research has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 27X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 17.2X versus its peer group's average of 17.2X. Additionally, the stock has a PEG ratio of 1.93. 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, Forrester Research 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 Forrester Research meets the list of requirements. Thus, it seems as though Forrester Research shares could have potential in the weeks and months to come.
How Does Forrester Research Stack Up to the Competition?
Shares of Forrester Research 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 looking good, including ASGN (
ASGN Quick Quote ASGN - Free Report) , Shutterstock ( SSTK Quick Quote SSTK - Free Report) , and j2 Global , 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 Forrester Research. Still, the fundamentals for Forrester Research are promising, and it still has potential despite being at a 52-week high.