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Summit Financial Group, Inc. (SMMF) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of Summit Financial (SMMF - Free Report) ? Shares have been on the move with the stock up 4.4% over the past month. The stock hit a new 52-week high of $28.4 in the previous session. Summit Financial has gained 2.6% since the start of the year compared to the -18.1% move for the Zacks Finance sector and the -14.5% return for the Zacks Banks - Southeast 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 April 28, 2022, Summit Financial reported EPS of $0.9 versus consensus estimate of $0.86.

For the current fiscal year, Summit Financial is expected to post earnings of $3.89 per share on $141.9 million in revenues. This represents a 12.1% change in EPS on a 9.04% change in revenues. For the next fiscal year, the company is expected to earn $3.99 per share on $146.7 million in revenues. This represents a year-over-year change of 2.57% and 3.38%, respectively.

Valuation Metrics

Summit Financial 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.

Summit Financial has a Value Score of B. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 7.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 10.4X. On a trailing cash flow basis, the stock currently trades at 6.8X versus its peer group's average of 8.4X. 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, Summit Financial 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 Summit Financial meets the list of requirements. Thus, it seems as though Summit Financial shares could have potential in the weeks and months to come.

How Does SMMF Stack Up to the Competition?

Shares of SMMF 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 Investar Holding Corporation (ISTR - Free Report) . ISTR has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of D.

Earnings were strong last quarter. Investar Holding Corporation beat our consensus estimate by 23.64%, and for the current fiscal year, ISTR is expected to post earnings of $2.57 per share on revenue of $97.45 million.

Shares of Investar Holding Corporation have gained 2.6% over the past month, and currently trade at a forward P/E of 8.43X and a P/CF of 17.99X.

The Banks - Southeast industry is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SMMF and ISTR, even beyond their own solid fundamental situation.


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