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Valmont Industries, Inc. (VMI) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of Valmont Industries (VMI - Free Report) ? Shares have been on the move with the stock up 28.1% over the past month. The stock hit a new 52-week high of $289.28 in the previous session. Valmont Industries has gained 15.3% since the start of the year compared to the -12.2% move for the Zacks Industrial Products sector and the 22.8% return for the Zacks Steel - Pipe and Tube 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 July 20, 2022, Valmont reported EPS of $3.7 versus consensus estimate of $3.29.

For the current fiscal year, Valmont is expected to post earnings of $13.86 per share on $4.22 billion in revenues. This represents a 26.92% change in EPS on a 20.61% change in revenues. For the next fiscal year, the company is expected to earn $15.49 per share on $4.34 billion in revenues. This represents a year-over-year change of 11.76% and 2.75%, respectively.

Valuation Metrics

Valmont 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.

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

In terms of its value breakdown, the stock currently trades at 20.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 16X. On a trailing cash flow basis, the stock currently trades at 18.7X versus its peer group's average of 12.6X. Additionally, the stock has a PEG ratio of 1.74. 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, Valmont 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 Valmont meets the list of requirements. Thus, it seems as though Valmont shares could still be poised for more gains ahead.


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