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TransMedics Group, Inc. (TMDX) Soars to 52-Week High, Time to Cash Out?

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Shares of TransMedics (TMDX - Free Report) have been strong performers lately, with the stock up 61.2% over the past month. The stock hit a new 52-week high of $124.52 in the previous session. TransMedics has gained 57.7% since the start of the year compared to the 2% move for the Zacks Medical sector and the 3.7% return for the Zacks Medical - Instruments 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 30, 2024, TransMedics reported EPS of $0.35 versus consensus estimate of $-0.05.

For the current fiscal year, TransMedics is expected to post earnings of $0.54 per share on $398.8 million in revenues. This represents a 170.13% change in EPS on a 65.05% change in revenues. For the next fiscal year, the company is expected to earn $0.88 per share on $508.46 million in revenues. This represents a year-over-year change of 62.65% and 27.5%, respectively.

Valuation Metrics

TransMedics 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.

TransMedics 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 230.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 26.1X. On a trailing cash flow basis, the stock currently trades at 874.3X versus its peer group's average of 15.7X. 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, TransMedics 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 TransMedics meets the list of requirements. Thus, it seems as though TransMedics shares could have a bit more room to run in the near term.

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