Yahoo Finance RadNet, Inc. (RDNT) Hits Fresh High: Is There Still Room to Run?
Have you been paying attention to shares of RadNet (RDNT)? Shares have been on the move with the stock up 20.6% over the past month. The stock hit a new 52-week high of $62.38 in the previous session. RadNet has gained 75.6% since the start of the year compared to the 6.1% move for the Zacks Medical sector and the 11.5% return for the Zacks Medical - Outpatient and Home Healthcare 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 May 8, 2024, RadNet reported EPS of $0.07 versus consensus estimate of $-0.09.
For the current fiscal year, RadNet is expected to post earnings of $0.59 per share on $1.77 billion in revenues. This represents a 18% change in EPS on a 9.22% change in revenues. For the next fiscal year, the company is expected to earn $0.64 per share on $1.89 billion in revenues. This represents a year-over-year change of 7.91% and 7.29%, respectively.
Valuation Metrics
RadNet 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 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. 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.
RadNet has a Value Score of C. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 103.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 22.9X. On a trailing cash flow basis, the stock currently trades at 18.3X versus its peer group's average of 13.2X. 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, RadNet 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 RadNet passes the test. Thus, it seems as though RadNet shares could have potential in the weeks and months to come.
How Does RDNT Stack Up to the Competition?
Shares of RDNT have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Encompass Health Corporation (EHC). EHC has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of F.
Earnings were strong last quarter. Encompass Health Corporation beat our consensus estimate by 20.43%, and for the current fiscal year, EHC is expected to post earnings of $4.10 per share on revenue of $5.3 billion.
Shares of Encompass Health Corporation have gained 0.8% over the past month, and currently trade at a forward P/E of 20.98X and a P/CF of 13.21X.
The Medical - Outpatient and Home Healthcare industry is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for RDNT and EHC, even beyond their own solid fundamental situation.
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RadNet, Inc. (RDNT) : Free Stock Analysis Report
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