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Penn Virginia (PVAC) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Penn Virginia ? Shares have been on the move with the stock up 35.3% over the past month. PVAC hit a new 52-week high of $85.96 in the previous session. Penn Virginia has gained 114.5% since the start of the year compared to the 2.9% move for the Oils-Energy sector and the 3% 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 May 9, 2018, Penn Virginia reported EPS of $1.47 versus the Zacks Consensus Estimate of $1.06 while it beat the consensus revenue estimate by 10.94%.

For the current fiscal year, Penn Virginia is expected to post earnings of $9.24 per share on $430.15 million in revenues. This represents a 220.83% change in EPS on a 168.08% change in revenues. For the next fiscal year, the company is expected to earn $14.25 per share on $569.3 million in revenues. This represents a year-over-year change of 54.16% and 32.35%, respectively.

Valuation Metrics

Penn Virginia may be at a 52-week high right now, but what might the future hold for PVAC? 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.

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

In terms of its value breakdown, the stock currently trades at 9.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 13.7X versus its peer group's average of 7.1X. 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, Penn Virginia 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 and Style Scores of A or B, it looks as if Penn Virginia meets the list of requirements. Thus, it seems as though PVAC shares could have a bit more room to run in the near term.

How Does Penn Virginia Stack Up to the Competition?

Shares of Penn Virginia have been rising, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Whiting Petroleum , Cheniere Energy (LNG - Free Report) , and Anadarko Petroleum , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 15% of all the industries we have in our universe, so it looks like there are some nice tailwinds for PVAC, even beyond its own solid fundamental situation.


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