Have you been paying attention to shares of Delta Apparel (DLA - Free Report) ? Shares have been on the move with the stock up 32.6% over the past month. The stock hit a new 52-week high of $21.7 in the previous session. Delta Apparel has gained 24% since the start of the year compared to the 7.5% move for the Zacks Consumer Discretionary sector and the 14.5% return for the Zacks Textile - Apparel 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 November 15, 2018, Delta Apparel reported EPS of $0.43 versus consensus estimate of $0.22.
For the current fiscal year, Delta Apparel is expected to post earnings of $1.6 per share on $431.58 million in revenues. This represents a -1.84% change in EPS on a 9.14% change in revenues.
While Delta Apparel 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 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.
Delta Apparel has a Value Score of A. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 13.4X 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 9.8X. Additionally, the stock has a PEG ratio of 0.89. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Delta Apparel 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 Delta Apparel fits the bill. Thus, it seems as though Delta Apparel shares could have potential in the weeks and months to come.
How Does Delta Apparel Stack Up to the Competition?
Shares of Delta Apparel have been soaring, 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 looking good, including Crocs (CROX - Free Report) , V.F. (VFC - Free Report) , and lululemon athletica (LULU - Free Report) , 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 12% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Delta Apparel, even beyond its own solid fundamental situation.