Shares of NuVasive (NUVA) have been strong performers lately, with the stock up 3.1% over the past month. The stock hit a new 52-week high of $74.1 in the previous session. NuVasive has gained 48.9% since the start of the year compared to the 7.3% move for the Zacks Medical sector and the 15.2% return for the Zacks Medical - Products 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 October 30, 2019, NuVasive reported EPS of $0.59 versus consensus estimate of $0.54 while it beat the consensus revenue estimate by 2.54%.
For the current fiscal year, NuVasive is expected to post earnings of $2.37 per share on $1.16 billion in revenues. This represents a 6.28% change in EPS on a 5.56% change in revenues. For the next fiscal year, the company is expected to earn $2.6 per share on $1.23 billion in revenues. This represents a year-over-year change of 9.38% and 5.81%, respectively.
NuVasive 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 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.
NuVasive has a Value Score of B. 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 31.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.2X versus its peer group's average of 19.6X. Additionally, the stock has a PEG ratio of 2.44. 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, NuVasive 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 NuVasive passes the test. Thus, it seems as though NuVasive shares could have potential in the weeks and months to come.
How Does NuVasive Stack Up to the Competition?
Shares of NuVasive 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 impressive, including NeuroMetrix (NURO), Haemonetics (HAE), and Edwards Lifesciences (EW), 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.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for NuVasive. Still, the fundamentals for NuVasive are promising, and it still has potential despite being at a 52-week high.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
NuVasive, Inc. (NUVA) : Free Stock Analysis Report
Edwards Lifesciences Corporation (EW) : Free Stock Analysis Report
Haemonetics Corporation (HAE) : Free Stock Analysis Report
NeuroMetrix, Inc. (NURO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research