Shares of Funko (FNKO - Free Report) have been strong performers lately, with the stock up 22.6% over the past month. The stock hit a new 52-week high of $27.62 in the previous session. Funko has gained 105.3% since the start of the year compared to the 21.5% move for the Zacks Consumer Discretionary sector and the 4.8% return for the Zacks Consumer Products - Discretionary 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 August 8, 2019, Funko, Inc. reported EPS of $0.25 versus consensus estimate of $0.13 while it beat the consensus revenue estimate by 11.87%.
For the current fiscal year, Funko, Inc. is expected to post earnings of $1.22 per share on $843.48 million in revenues. This represents a 55% change in EPS on a 22.94% change in revenues. For the next fiscal year, the company is expected to earn $1.42 per share on $945.44 million in revenues. This represents a year-over-year change of 17.84% and 12.09%, respectively.
Funko, Inc. 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 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.
Funko, Inc. has a Value Score of C. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 17.3X versus its peer group's average of 5.4X. Additionally, the stock has a PEG ratio of 1.17. 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, Funko, Inc. 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 Funko, Inc. passes the test. Thus, it seems as though Funko, Inc. shares could still be poised for more gains ahead.
How Does Funko, Inc. Stack Up to the Competition?
Shares of Funko, Inc. 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 K12 (LRN - Free Report) , SP Plus (SP - Free Report) , and Grand Canyon Education (LOPE - 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 40% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Funko, Inc.even beyond its own solid fundamental situation.