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Brady Corporation (BRC) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Brady (BRC - Free Report) ? Shares have been on the move with the stock up 13.3% over the past month. The stock hit a new 52-week high of $68.8 in the previous session. Brady has gained 15.8% since the start of the year compared to the 14.2% move for the Zacks Industrial Products sector and the 12.7% return for the Zacks Security and Safety Services 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 May 22, 2024, Brady reported EPS of $1.09 versus consensus estimate of $1.02.

Valuation Metrics

While Brady has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? 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.

Brady 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 16.5X current fiscal year EPS estimates, which is not in-line with the peer industry average of 22X. On a trailing cash flow basis, the stock currently trades at 15.4X versus its peer group's average of 15.4X. Additionally, the stock has a PEG ratio of 2.37. 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, Brady 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 Brady meets the list of requirements. Thus, it seems as though Brady shares could have potential in the weeks and months to come.


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