Shares of Gannett Co. (
GCI Quick Quote GCI - Free Report) have been strong performers lately, with the stock up 26.5% over the past month. The stock hit a new 52-week high of $7.05 in the previous session. Gannett Co. has gained 104.8% since the start of the year compared to the -17.4% move for the Zacks Business Services sector and the 17.5% return for the Zacks Advertising and Marketing industry. What's Driving the Outperformance?
The stock has a great 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 August 6, 2021, Gannett reported EPS of $0.2 versus consensus estimate of $-0.72.
For the current fiscal year, Gannett is expected to post earnings of $-0.47 per share on $3.3 billion in revenues. This represents a 28.79% change in EPS on a -3.05% change in revenues. For the next fiscal year, the company is expected to earn $0.39 per share on $3.15 billion in revenues. This represents a year-over-year change of 182.98% and -4.72%, respectively.
Gannett 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.
Gannett has a Value Score of A. 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 12.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 1.7X versus its peer group's average of 10.6X. 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, Gannett 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 Gannett passes the test. Thus, it seems as though Gannett shares could have a bit more room to run in the near term.
How Does Gannett Stack Up to the Competition?
Shares of Gannett 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 solid potential picks, including Gannett Co. (
GCI Quick Quote GCI - Free Report) , ManpowerGroup ( MAN Quick Quote MAN - Free Report) , and FTI Consulting ( FCN Quick Quote FCN - 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 Gannett. Still, the fundamentals for Gannett are promising, and it still has potential despite being at a 52-week high.