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Revolve Group (RVLV) Hits Fresh High: Is There Still Room to Run?

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Shares of Revolve Group (RVLV - Free Report) have been strong performers lately, with the stock up 18.3% over the past month. The stock hit a new 52-week high of $75.47 in the previous session. Revolve Group has gained 140.7% since the start of the year compared to the -5.5% move for the Zacks Retail-Wholesale sector and the -28.4% return for the Zacks Internet - Commerce 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 4, 2021, Revolve Group reported EPS of $0.42 versus consensus estimate of $0.22.

For the current fiscal year, Revolve Group is expected to post earnings of $1.05 per share on $828.05 million in revenues. This represents a 50% change in EPS on a 42.61% change in revenues. For the next fiscal year, the company is expected to earn $1.19 per share on $1.01 billion in revenues. This represents a year-over-year change of 13.25% and 21.89%, respectively.

Valuation Metrics

Revolve Group 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.

Revolve Group has a Value Score of F. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 71.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 97.5X versus its peer group's average of 34.2X. Additionally, the stock has a PEG ratio of 3.44. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Revolve Group 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 Revolve Group passes the test. Thus, it seems as though Revolve Group shares could have a bit more room to run in the near term.

How Does Revolve Group Stack Up to the Competition?

Shares of Revolve Group 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 (JD - Free Report) , O'Reilly Automotive (ORLY - Free Report) , and AutoZone (AZO - 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 Revolve Group. Still, the fundamentals for Revolve Group are promising, and it still has potential despite being at a 52-week high.

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