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Vital Farms, Inc. (VITL) Hit a 52 Week High, Can the Run Continue?

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Have you been paying attention to shares of Vital Farms (VITL - Free Report) ? Shares have been on the move with the stock up 53.8% over the past month. The stock hit a new 52-week high of $39.55 in the previous session. Vital Farms has gained 148.4% since the start of the year compared to the 4.6% move for the Zacks Consumer Staples sector and the 4.1% return for the Zacks Food - 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 May 9, 2024, Vital Farms reported EPS of $0.43 versus consensus estimate of $0.23.

For the current fiscal year, Vital Farms is expected to post earnings of $0.94 per share on $578 million in revenues. This represents a 59.32% change in EPS on a 22.49% change in revenues. For the next fiscal year, the company is expected to earn $1.13 per share on $670.27 million in revenues. This represents a year-over-year change of 20.48% and 15.96%, respectively.

Valuation Metrics

Vital Farms 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 has run ahead of itself.

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.

Vital Farms 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 41.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.4X. On a trailing cash flow basis, the stock currently trades at 42.7X versus its peer group's average of 11.4X. 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, Vital Farms currently has a Zacks Rank of #1 (Strong 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 Vital Farms fits the bill. Thus, it seems as though Vital Farms shares could have potential in the weeks and months to come.

How Does VITL Stack Up to the Competition?

Shares of VITL 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 Utz Brands, Inc. (UTZ - Free Report) . UTZ has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of C, and a Momentum Score of B.

Earnings were strong last quarter. Utz Brands, Inc. beat our consensus estimate by 7.69%, and for the current fiscal year, UTZ is expected to post earnings of $0.71 per share on revenue of $1.43 billion.

Shares of Utz Brands, Inc. have gained 0.5% over the past month, and currently trade at a forward P/E of 25.43X and a P/CF of 15.68X.

The Food - Miscellaneous industry is in the top 34% of all the industries we have in our universe, so it looks like there are some nice tailwinds for VITL and UTZ, even beyond their own solid fundamental situation.

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