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Encore Wire Corporation (WIRE) Soars to 52-Week High, Time to Cash Out?
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Have you been paying attention to shares of Encore Wire (WIRE - Free Report) ? Shares have been on the move with the stock up 19.5% over the past month. The stock hit a new 52-week high of $154.06 in the previous session. Encore Wire has gained 5% since the start of the year compared to the -11.1% move for the Zacks Industrial Products sector and the -0.3% return for the Zacks Wire and Cable Products 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 October 25, 2022, Encore Wire reported EPS of $9.97 versus consensus estimate of $4.63.
Valuation Metrics
While Encore Wire 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.
Encore Wire has a Value Score of A. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 4.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 8.6X. On a trailing cash flow basis, the stock currently trades at 5.4X versus its peer group's average of 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Encore Wire currently has a Zacks Rank of #1 (Strong 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 Encore Wire meets the list of requirements. Thus, it seems as though Encore Wire shares could have potential in the weeks and months to come.
How Does WIRE Stack Up to the Competition?
Shares of WIRE 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 Belden Inc (BDC - Free Report) . BDC has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Belden Inc beat our consensus estimate by 12.74%, and for the current fiscal year, BDC is expected to post earnings of $6.43 per share on revenue of $2.59 billion.
Shares of Belden Inc have gained 27.6% over the past month, and currently trade at a forward P/E of 12.64X and a P/CF of 8.07X.
The Wire and Cable Products industry is in the top 1% of all the industries we have in our universe, so it looks like there are some nice tailwinds for WIRE and BDC, even beyond their own solid fundamental situation.
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Encore Wire Corporation (WIRE) Soars to 52-Week High, Time to Cash Out?
Have you been paying attention to shares of Encore Wire (WIRE - Free Report) ? Shares have been on the move with the stock up 19.5% over the past month. The stock hit a new 52-week high of $154.06 in the previous session. Encore Wire has gained 5% since the start of the year compared to the -11.1% move for the Zacks Industrial Products sector and the -0.3% return for the Zacks Wire and Cable Products 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 October 25, 2022, Encore Wire reported EPS of $9.97 versus consensus estimate of $4.63.
Valuation Metrics
While Encore Wire 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.
Encore Wire has a Value Score of A. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 4.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 8.6X. On a trailing cash flow basis, the stock currently trades at 5.4X versus its peer group's average of 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Encore Wire currently has a Zacks Rank of #1 (Strong 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 Encore Wire meets the list of requirements. Thus, it seems as though Encore Wire shares could have potential in the weeks and months to come.
How Does WIRE Stack Up to the Competition?
Shares of WIRE 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 Belden Inc (BDC - Free Report) . BDC has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of C, and a Momentum Score of B.
Earnings were strong last quarter. Belden Inc beat our consensus estimate by 12.74%, and for the current fiscal year, BDC is expected to post earnings of $6.43 per share on revenue of $2.59 billion.
Shares of Belden Inc have gained 27.6% over the past month, and currently trade at a forward P/E of 12.64X and a P/CF of 8.07X.
The Wire and Cable Products industry is in the top 1% of all the industries we have in our universe, so it looks like there are some nice tailwinds for WIRE and BDC, even beyond their own solid fundamental situation.