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Nine Energy Service, Inc. (NINE) Hit a 52 Week High, Can the Run Continue?

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Have you been paying attention to shares of Nine Energy Service (NINE - Free Report) ? Shares have been on the move with the stock up 149.2% over the past month. The stock hit a new 52-week high of $10.29 in the previous session. Nine Energy Service has gained 842% since the start of the year compared to the 44% move for the Zacks Oils-Energy sector and the 20.2% return for the Zacks Oil and Gas - Field Services 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 7, 2022, Nine Energy reported EPS of $0.38 versus consensus estimate of $0.16 while it beat the consensus revenue estimate by 8.58%.

For the current fiscal year, Nine Energy is expected to post earnings of $0.57 per share on $591.7 million in revenues. This represents a 121.43% change in EPS on a 69.34% change in revenues. For the next fiscal year, the company is expected to earn $2.29 per share on $737.5 million in revenues. This represents a year-over-year change of 301.75% and 24.64%, respectively.

Valuation Metrics

Nine Energy 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.

Nine Energy 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 16.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 23.9X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 16.6X. 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, Nine Energy currently has a Zacks Rank of #1 (Strong 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 Nine Energy fits the bill. Thus, it seems as though Nine Energy shares could have potential in the weeks and months to come.

How Does NINE Stack Up to the Competition?

Shares of NINE 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 Oceaneering International, Inc. (OII - Free Report) . OII has a Zacks Rank of # 2 (Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of B.

Earnings were strong last quarter. Oceaneering International, Inc. beat our consensus estimate by 76.92%, and for the current fiscal year, OII is expected to post earnings of $0.78 per share on revenue of $2.06 billion.

Shares of Oceaneering International, Inc. have gained 68.5% over the past month, and currently trade at a forward P/E of 87.24X and a P/CF of 9.46X.

The Oil and Gas - Field Services industry is in the top 11% of all the industries we have in our universe, so it looks like there are some nice tailwinds for NINE and OII, even beyond their own solid fundamental situation.


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