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Boise Cascade, L.L.C. (BCC) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Boise Cascade (BCC - Free Report) ? Shares have been on the move with the stock up 8.5% over the past month. The stock hit a new 52-week high of $85.17 in the previous session. Boise Cascade has gained 19.4% since the start of the year compared to the -18.6% move for the Zacks Construction sector and the -15.7% return for the Zacks Building Products - Wood 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 May 5, 2022, Boise Cascade reported EPS of $7.61 versus consensus estimate of $6.95.

Valuation Metrics

While Boise Cascade 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.

Boise Cascade 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 4.6X current fiscal year EPS estimates, which is not in-line with the peer industry average of 9.9X. On a trailing cash flow basis, the stock currently trades at 4.2X versus its peer group's average of 7.6X. Additionally, the stock has a PEG ratio of 2.01. 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, Boise Cascade currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

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 Boise Cascade meets the list of requirements. Thus, it seems as though Boise Cascade shares could have potential in the weeks and months to come.

How Does BCC Stack Up to the Competition?

Shares of BCC have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Weyerhaeuser Company (WY - Free Report) . WY has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of C, and a Momentum Score of A.

Earnings were strong last quarter. Weyerhaeuser Company beat our consensus estimate by 14.91%, and for the current fiscal year, WY is expected to post earnings of $3.20 per share on revenue of $11.25 billion.

Shares of Weyerhaeuser Company have gained 0.9% over the past month, and currently trade at a forward P/E of 12.21X and a P/CF of 9.75X.

The Building Products - Wood industry is in the top 16% of all the industries we have in our universe, so it looks like there are some nice tailwinds for BCC and WY, even beyond their own solid fundamental situation.


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