Have you been paying attention to shares of Clearfield (CLFD)? Shares have been on the move with the stock up 8.1% over the past month. The stock hit a new 52-week high of $132.97 in the previous session. Clearfield has gained 53.4% since the start of the year compared to the -30.5% move for the Zacks Computer and Technology sector and the -25.4% return for the Zacks Wireless Equipment 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 17, 2022, Clearfield reported EPS of $1.22 versus consensus estimate of $0.8 while it beat the consensus revenue estimate by 37.13%.
For the current fiscal year, Clearfield is expected to post earnings of $4.95 per share on $386.5 million in revenues. This represents a 39.44% change in EPS on a 42.68% change in revenues.
Clearfield 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.
Clearfield has a Value Score of D. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 26.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.6X. On a trailing cash flow basis, the stock currently trades at 33.8X versus its peer group's average of 11X. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Clearfield 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 Clearfield fits the bill. Thus, it seems as though Clearfield shares could have potential in the weeks and months to come.
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