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Merit Medical Systems, Inc. (MMSI) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Merit Medical (MMSI - Free Report) ? Shares have been on the move with the stock up 12.1% over the past month. The stock hit a new 52-week high of $82.99 in the previous session. Merit Medical has gained 15.8% since the start of the year compared to the -1.4% move for the Zacks Medical sector and the 9.1% return for the Zacks Medical - Dental Supplies 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 April 26, 2023, Merit Medical reported EPS of $0.64 versus consensus estimate of $0.55 while it beat the consensus revenue estimate by 1.26%.

For the current fiscal year, Merit Medical is expected to post earnings of $2.88 per share on $1.2 billion in revenues. This represents a 6.67% change in EPS on a 4.31% change in revenues. For the next fiscal year, the company is expected to earn $3.18 per share on $1.26 billion in revenues. This represents a year-over-year change of 10.35% and 5.1%, respectively.

Valuation Metrics

Merit Medical 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

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

In terms of its value breakdown, the stock currently trades at 28.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 21.9X. On a trailing cash flow basis, the stock currently trades at 18.7X versus its peer group's average of 12.4X. Additionally, the stock has a PEG ratio of 2.58. 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, Merit Medical currently has a Zacks Rank of #2 (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 Merit Medical meets the list of requirements. Thus, it seems as though Merit Medical shares could have a bit more room to run in the near term.

How Does MMSI Stack Up to the Competition?

Shares of MMSI 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 Cardinal Health, Inc. (CAH - Free Report) . CAH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. Cardinal Health, Inc. beat our consensus estimate by 16.81%, and for the current fiscal year, CAH is expected to post earnings of $5.45 per share on revenue of $202.29 billion.

Shares of Cardinal Health, Inc. have gained 8.9% over the past month, and currently trade at a forward P/E of 15.05X and a P/CF of 10.61X.

The Medical - Dental Supplies industry is in the top 23% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MMSI and CAH, even beyond their own solid fundamental situation.

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