Have you been paying attention to shares of Sapiens International Corporation N.V. (SPNS - Free Report) ? Shares have been on the move with the stock up 4.8% over the past month. The stock hit a new 52-week high of $19.76 in the previous session. Sapiens International Corporation N.V. has gained 78.1% since the start of the year compared to the 21.1% move for the Zacks Computer and Technology sector and the 30.6% return for the Zacks Computer - Software 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 5, 2019, Sapiens reported EPS of $0.19 versus consensus estimate of $0.17 while it beat the consensus revenue estimate by 1.71%.
For the current fiscal year, Sapiens is expected to post earnings of $0.74 per share on $321.65 million in revenues. This represents a 32.14% change in EPS on a 11.02% change in revenues. For the next fiscal year, the company is expected to earn $0.84 per share on $351.19 million in revenues. This represents a year-over-year change of 14.41% and 9.18%, respectively.
Sapiens 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 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. 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.
Sapiens has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 26.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 21.1X versus its peer group's average of 23.1X. Additionally, the stock has a PEG ratio of 2.67. 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, Sapiens 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 Sapiens meets the list of requirements. Thus, it seems as though Sapiens shares could have potential in the weeks and months to come.
How Does Sapiens Stack Up to the Competition?
Shares of Sapiens 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 Cornerstone OnDemand (CSOD - Free Report) , Microsoft (MSFT - Free Report) , and Adobe Systems (ADBE - 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 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Sapiens, even beyond its own solid fundamental situation.