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Hitachi Ltd. (HTHIY) Soars to 52-Week High, Time to Cash Out?

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Have you been paying attention to shares of Hitachi Ltd. (HTHIY - Free Report) ? Shares have been on the move with the stock up 14.7% over the past month. The stock hit a new 52-week high of $161.44 in the previous session. Hitachi Ltd. has gained 11.5% since the start of the year compared to the 0.7% move for the Zacks Conglomerates sector and the 0.7% return for the Zacks Diversified Operations industry.

What's Driving the Outperformance?

The stock has a great 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 January 31, 2024, Hitachi Ltd. reported EPS of $3.44 versus consensus estimate of $1.72.

For the current fiscal year, Hitachi Ltd. is expected to post earnings of $7.68 per share on $61.02 billion in revenues. This represents a -25.73% change in EPS on a -25.53% change in revenues. For the next fiscal year, the company is expected to earn $8.41 per share on $59.41 billion in revenues. This represents a year-over-year change of 9.57% and -2.64%, respectively.

Valuation Metrics

Hitachi Ltd. 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 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. 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.

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

In terms of its value breakdown, the stock currently trades at 21X current fiscal year EPS estimates, which is a premium to the peer industry average of 15.9X. On a trailing cash flow basis, the stock currently trades at 8.6X versus its peer group's average of 7.9X. Additionally, the stock has a PEG ratio of 11.72. 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, Hitachi Ltd. currently has a Zacks Rank of #2 (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 Hitachi Ltd. fits the bill. Thus, it seems as though Hitachi Ltd. shares could still be poised for more gains ahead.

How Does HTHIY Stack Up to the Competition?

Shares of HTHIY 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 ITT Inc. (ITT - Free Report) . ITT has a Zacks Rank of # 2 (Buy) and a Value Score of D, a Growth Score of B, and a Momentum Score of A.

Earnings were strong last quarter. ITT Inc. beat our consensus estimate by 7.87%, and for the current fiscal year, ITT is expected to post earnings of $5.85 per share on revenue of $3.27 billion.

Shares of ITT Inc. have gained 8.3% over the past month, and currently trade at a forward P/E of 21.22X and a P/CF of 21.43X.

The Diversified Operations industry is in the top 39% of all the industries we have in our universe, so it looks like there are some nice tailwinds for HTHIY and ITT, even beyond their own solid fundamental situation.

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