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Harmonic Inc. (HLIT) Hits Fresh High: Is There Still Room to Run?
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Have you been paying attention to shares of Harmonic (HLIT - Free Report) ? Shares have been on the move with the stock up 4.6% over the past month. The stock hit a new 52-week high of $15.8 in the previous session. Harmonic has gained 18% since the start of the year compared to the -34.7% move for the Zacks Computer and Technology sector and the -16.4% return for the Zacks Communication - Components 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 October 31, 2022, Harmonic reported EPS of $0.13 versus consensus estimate of $0.1.
For the current fiscal year, Harmonic is expected to post earnings of $0.48 per share on $615.9 million in revenues. This represents a 41.18% change in EPS on a 21.44% change in revenues. For the next fiscal year, the company is expected to earn $0.70 per share on $710.9 million in revenues. This represents a year-over-year change of 46.53% and 15.42%, respectively.
Valuation Metrics
Harmonic 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 is due for a pullback from this level.
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. 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.
Harmonic has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 29.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.1X. On a trailing cash flow basis, the stock currently trades at 42.6X versus its peer group's average of 14.6X. 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, Harmonic 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 Harmonic passes the test. Thus, it seems as though Harmonic shares could have a bit more room to run in the near term.
How Does HLIT Stack Up to the Competition?
Shares of HLIT 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 Viavi Solutions Inc. (VIAV - Free Report) . VIAV has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Viavi Solutions Inc. beat our consensus estimate by 4.35%, and for the current fiscal year, VIAV is expected to post earnings of $0.96 per share on revenue of $1.31 billion.
Shares of Viavi Solutions Inc. have gained 7.7% over the past month, and currently trade at a forward P/E of 15.74X and a P/CF of 13.7X.
The Communication - Components industry is in the top 25% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HLIT and VIAV, even beyond their own solid fundamental situation.
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Harmonic Inc. (HLIT) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Harmonic (HLIT - Free Report) ? Shares have been on the move with the stock up 4.6% over the past month. The stock hit a new 52-week high of $15.8 in the previous session. Harmonic has gained 18% since the start of the year compared to the -34.7% move for the Zacks Computer and Technology sector and the -16.4% return for the Zacks Communication - Components 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 October 31, 2022, Harmonic reported EPS of $0.13 versus consensus estimate of $0.1.
For the current fiscal year, Harmonic is expected to post earnings of $0.48 per share on $615.9 million in revenues. This represents a 41.18% change in EPS on a 21.44% change in revenues. For the next fiscal year, the company is expected to earn $0.70 per share on $710.9 million in revenues. This represents a year-over-year change of 46.53% and 15.42%, respectively.
Valuation Metrics
Harmonic 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 is due for a pullback from this level.
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. 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.
Harmonic has a Value Score of C. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 29.1X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.1X. On a trailing cash flow basis, the stock currently trades at 42.6X versus its peer group's average of 14.6X. 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, Harmonic 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 Harmonic passes the test. Thus, it seems as though Harmonic shares could have a bit more room to run in the near term.
How Does HLIT Stack Up to the Competition?
Shares of HLIT 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 Viavi Solutions Inc. (VIAV - Free Report) . VIAV has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of A, and a Momentum Score of C.
Earnings were strong last quarter. Viavi Solutions Inc. beat our consensus estimate by 4.35%, and for the current fiscal year, VIAV is expected to post earnings of $0.96 per share on revenue of $1.31 billion.
Shares of Viavi Solutions Inc. have gained 7.7% over the past month, and currently trade at a forward P/E of 15.74X and a P/CF of 13.7X.
The Communication - Components industry is in the top 25% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HLIT and VIAV, even beyond their own solid fundamental situation.