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Nine Energy Service, Inc. (NINE) Hits Fresh High: Is There Still Room to Run?
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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 75.1% over the past month. The stock hit a new 52-week high of $11.2 in the previous session. Nine Energy Service has gained 956% since the start of the year compared to the 42.1% move for the Zacks Oils-Energy sector and the 18.9% 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 has run ahead of itself.
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. The idea behind the style scores is to help investors 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 C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 18.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 23X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 16.9X. 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, 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 passes the test. Thus, it seems as though Nine Energy shares could have a bit more room to run in the near term.
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Nine Energy Service, Inc. (NINE) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of Nine Energy Service (NINE - Free Report) ? Shares have been on the move with the stock up 75.1% over the past month. The stock hit a new 52-week high of $11.2 in the previous session. Nine Energy Service has gained 956% since the start of the year compared to the 42.1% move for the Zacks Oils-Energy sector and the 18.9% 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 has run ahead of itself.
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. The idea behind the style scores is to help investors 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 C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 18.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 23X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 16.9X. 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, 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 passes the test. Thus, it seems as though Nine Energy shares could have a bit more room to run in the near term.