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Alpha and Omega (AOSL) Hits 52-Week High, Can the Run Continue?

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Shares of Alpha and Omega Semiconductor (AOSL - Free Report) have been strong performers lately, with the stock up 36.4% over the past month. The stock hit a new 52-week high of $53.98 in the previous session. Alpha and Omega Semiconductor has gained 114.6% since the start of the year compared to the 22.6% move for the Zacks Computer and Technology sector and the 36% return for the Zacks Electronics - Semiconductors 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 November 4, 2021, Alpha and Omega reported EPS of $1.06 versus consensus estimate of $0.95 while it beat the consensus revenue estimate by 3.91%.

For the current fiscal year, Alpha and Omega is expected to post earnings of $4.07 per share on $747.25 million in revenues. This represents a 39.25% change in EPS on a 13.75% change in revenues. For the next fiscal year, the company is expected to earn $4.11 per share on $782.65 million in revenues. This represents a year-over-year change of 0.74% and 4.74%, respectively.

Valuation Metrics

Alpha and Omega 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 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. 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.

Alpha and Omega has a Value Score of A. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of A.

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 11.3X versus its peer group's average of 22.1X. 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, Alpha and Omega 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 Alpha and Omega passes the test. Thus, it seems as though Alpha and Omega shares could still be poised for more gains ahead.

How Does Alpha and Omega Stack Up to the Competition?

Shares of Alpha and Omega 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 SMART Global Holdings (SGH - Free Report) , Silicon Motion Technology (SIMO - Free Report) , and Lattice Semiconductor (LSCC - 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 17% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Alpha and Omega, even beyond its own solid fundamental situation.

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