Have you been paying attention to shares of
Sprinkler (? Shares have been on the move with the stock up 21.8% over the past month. The stock hit a new 52-week high of $14.95 in the previous session. Sprinkler has gained 75% since the start of the year compared to the 5.5% move for the Zacks Business Services sector and the 15.8% return for the Zacks Technology Services industry. CXM Quick Quote CXM - Free Report) 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 June 5, 2023, Sprinkler reported EPS of $0.06 versus consensus estimate of $0.01 while it beat the consensus revenue estimate by 2.68%.
For the current fiscal year, Sprinkler is expected to post earnings of $0.14 per share on $713.23 million in revenues. This represents a 1300% change in EPS on a 15.37% change in revenues. For the next fiscal year, the company is expected to earn $0.24 per share on $827.1 million in revenues. This represents a year-over-year change of 71.43% and 15.97%, respectively.
Sprinkler 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.
Sprinkler has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 103.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 24.4X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 8.4X. Additionally, the stock has a PEG ratio of 3.45. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Sprinkler 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 Sprinkler meets the list of requirements. Thus, it seems as though Sprinkler shares could have potential in the weeks and months to come.
How Does CXM Stack Up to the Competition?
Shares of CXM 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
Inspired Entertainment, Inc. (. INSE has a Zacks Rank of # 1 (Strong Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of D. INSE Quick Quote INSE - Free Report)
Earnings were strong last quarter. Inspired Entertainment, Inc. beat our consensus estimate by 116.67%, and for the current fiscal year, INSE is expected to post earnings of $1.10 per share on revenue of $343.47 million.
Shares of Inspired Entertainment, Inc. have gained 15.7% over the past month, and currently trade at a forward P/E of 14.28X and a P/CF of 6.49X.
The Technology Services industry is in the top 44% of all the industries we have in our universe, so it looks like there are some nice tailwinds for CXM and INSE, even beyond their own solid fundamental situation.