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Charles River (CRL) Hits Fresh High: Is There Still Room to Run?

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Have you been paying attention to shares of Charles River Laboratories International (CRL - Free Report) ? Shares have been on the move with the stock up 8.6% over the past month. The stock hit a new 52-week high of $175.25 in the previous session. Charles River Laboratories International has gained 13.5% since the start of the year compared to the 2.4% move for the Zacks Medical sector and the 13.3% return for the Zacks Medical Services industry.

What's Driving the Outperformance?

The stock has a great 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 February 11, 2020, Charles River reported EPS of $2.01 versus consensus estimate of $1.83 while it beat the consensus revenue estimate by 0.94%.

Valuation Metrics

Charles River 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.

Charles River 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 23.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.9X versus its peer group's average of 15.9X. Additionally, the stock has a PEG ratio of 1.95. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Charles River currently has a Zacks Rank of #2 (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 Charles River passes the test. Thus, it seems as though Charles River shares could still be poised for more gains ahead.


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