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Arcosa, Inc. (ACA) Hits Fresh High: Is There Still Room to Run?

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Shares of Arcosa (ACA - Free Report) have been strong performers lately, with the stock up 3.6% over the past month. The stock hit a new 52-week high of $89.07 in the previous session. Arcosa has gained -1.6% since the start of the year compared to the 6.1% move for the Zacks Construction sector and the 9.7% return for the Zacks Building Products - Miscellaneous 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 22, 2024, Arcosa reported EPS of $0.68 versus consensus estimate of $0.33 while it beat the consensus revenue estimate by 6.89%.

Valuation Metrics

Arcosa 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.

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

In terms of its value breakdown, the stock currently trades at 24X current fiscal year EPS estimates, which is a premium to the peer industry average of 19X. On a trailing cash flow basis, the stock currently trades at 12.5X versus its peer group's average of 14.9X. 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Arcosa 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 Arcosa fits the bill. Thus, it seems as though Arcosa shares could still be poised for more gains ahead.

How Does ACA Stack Up to the Competition?

Shares of ACA 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 Advanced Drainage Systems, Inc. (WMS - Free Report) . WMS has a Zacks Rank of # 1 (Strong Buy) and a Value Score of D, a Growth Score of A, and a Momentum Score of B.

Earnings were strong last quarter. Advanced Drainage Systems, Inc. beat our consensus estimate by 47.31%, and for the current fiscal year, WMS is expected to post earnings of $6.71 per share on revenue of $2.83 billion.

Shares of Advanced Drainage Systems, Inc. have gained 24.7% over the past month, and currently trade at a forward P/E of 28.24X and a P/CF of 20.31X.

The Building Products - Miscellaneous industry is in the top 7% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ACA and WMS, even beyond their own solid fundamental situation.

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