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Statoil (STO) Hits Fresh Highs: Is There Still Room to Run?

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Have you been paying attention to shares of Statoil ASA ? Shares have been on the move with the stock up 6.1% over the past month. STO hit a new 52-week high of $27.24 in the previous session. Statoil has gained 26.7% since the start of the year compared to the 9.5% move for the Oils-Energy sector and the 8.7% year-to-date return for its peer group.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on April 25, 2018, Statoil reported EPS of $0.45 versus the Zacks Consensus Estimate of $0.4 while it beat the consensus revenue estimate by 13.13%.

For the current fiscal year, Statoil is expected to post earnings of $1.5 per share on $68.68 billion in revenues. This represents a 18.12% change in EPS on a 12.24% change in revenues. For the next fiscal year, the company is expected to earn $1.43 per share on $67.38 billion in revenues. This represents a year-over-year change of 3.89% and -1.89%, respectively.

Valuation Metrics

Statoil ASA may be at a 52-week high right now, but what might the future hold for STO? 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 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

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

In terms of its value breakdown, the stock currently trades at 18.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 6.8X versus its peer group's average of 5.9X. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Statoil ASA Price and Consensus

 

Statoil ASA Price and Consensus | Statoil ASA Quote

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, Statoil 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 or 2 (Buy) and Style Scores of A or B, it looks as if Statoil passes the test. Thus, it seems as though STO shares could have potential in the weeks and months to come.

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