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Summit Materials, Inc. (SUM) Hit a 52 Week High, Can the Run Continue?
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Have you been paying attention to shares of Summit Materials (SUM - Free Report) ? Shares have been on the move with the stock up 14.3% over the past month. The stock hit a new 52-week high of $41.99 in the previous session. Summit Materials has gained 8% since the start of the year compared to the 3.1% move for the Zacks Construction sector and the 9.9% return for the Zacks Building Products - Concrete and Aggregates 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 February 14, 2024, Summit Materials reported EPS of $0.31 versus consensus estimate of $0.27.
For the current fiscal year, Summit Materials is expected to post earnings of $2.03 per share on $4.36 billion in revenues. This represents a 28.48% change in EPS on a 78.43% change in revenues. For the next fiscal year, the company is expected to earn $2.49 per share on $4.59 billion in revenues. This represents a year-over-year change of 22.82% and 5.35%, respectively.
Valuation Metrics
Summit Materials 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.
Summit Materials has a Value Score of B. The stock's Growth and Momentum Scores are C and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.2X. On a trailing cash flow basis, the stock currently trades at 11.9X versus its peer group's average of 14.1X. 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, Summit Materials 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 Summit Materials fits the bill. Thus, it seems as though Summit Materials shares could have a bit more room to run in the near term.
How Does SUM Stack Up to the Competition?
Shares of SUM 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 Eagle Materials Inc (EXP - Free Report) . EXP has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of C.
Earnings were strong last quarter. Eagle Materials Inc beat our consensus estimate by 4.49%, and for the current fiscal year, EXP is expected to post earnings of $16.07 per share on revenue of $2.29 billion.
Shares of Eagle Materials Inc have gained 20.6% over the past month, and currently trade at a forward P/E of 17.28X and a P/CF of 14.74X.
The Building Products - Concrete and Aggregates industry is in the top 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SUM and EXP, even beyond their own solid fundamental situation.
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Summit Materials, Inc. (SUM) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Summit Materials (SUM - Free Report) ? Shares have been on the move with the stock up 14.3% over the past month. The stock hit a new 52-week high of $41.99 in the previous session. Summit Materials has gained 8% since the start of the year compared to the 3.1% move for the Zacks Construction sector and the 9.9% return for the Zacks Building Products - Concrete and Aggregates 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 February 14, 2024, Summit Materials reported EPS of $0.31 versus consensus estimate of $0.27.
For the current fiscal year, Summit Materials is expected to post earnings of $2.03 per share on $4.36 billion in revenues. This represents a 28.48% change in EPS on a 78.43% change in revenues. For the next fiscal year, the company is expected to earn $2.49 per share on $4.59 billion in revenues. This represents a year-over-year change of 22.82% and 5.35%, respectively.
Valuation Metrics
Summit Materials 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.
Summit Materials has a Value Score of B. The stock's Growth and Momentum Scores are C and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 20.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.2X. On a trailing cash flow basis, the stock currently trades at 11.9X versus its peer group's average of 14.1X. 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, Summit Materials 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 Summit Materials fits the bill. Thus, it seems as though Summit Materials shares could have a bit more room to run in the near term.
How Does SUM Stack Up to the Competition?
Shares of SUM 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 Eagle Materials Inc (EXP - Free Report) . EXP has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of B, and a Momentum Score of C.
Earnings were strong last quarter. Eagle Materials Inc beat our consensus estimate by 4.49%, and for the current fiscal year, EXP is expected to post earnings of $16.07 per share on revenue of $2.29 billion.
Shares of Eagle Materials Inc have gained 20.6% over the past month, and currently trade at a forward P/E of 17.28X and a P/CF of 14.74X.
The Building Products - Concrete and Aggregates industry is in the top 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for SUM and EXP, even beyond their own solid fundamental situation.