Have you been paying attention to shares of Harsco (HSC)? Shares have been on the move with the stock up 10.2% over the past month. HSC hit a new 52-week high of $26.8 in the previous session. Harsco has gained 42.4% since the start of the year compared to the -4.9% move for the Zacks Industrial Products sector and the 29.9% return for the Zacks Industrial Services 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 2, 2018, Harsco reported EPS of $0.36 versus consensus estimate of $0.35 while it missed the consensus revenue estimate by 1.6%.
For the current fiscal year, Harsco is expected to post earnings of $1.23 per share on $1.72 billion in revenues. This represents a 66.22% change in EPS on a 6.97% change in revenues. For the next fiscal year, the company is expected to earn $1.4 per share on $1.8 billion in revenues. This represents a year-over-year change of 13.82% and 4.82%, respectively.
Harsco may be at a 52-week high right now, but what might the future hold for HSC? 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Harsco has a Value Score of B. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 21.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 11.2X versus its peer group's average of 11.6X. 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, Harsco 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 Harsco meets the list of requirements. Thus, it seems as though HSC shares could have a bit more room to run in the near term.
How Does Harsco Stack Up to the Competition?
Shares of Harsco have been moving higher, 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 solid potential picks, including ScanSource (SCSC), Belden (BDC), and Avery Dennison (AVY), 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 Harsco. Still, the fundamentals for HSC 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 Harsco Corporation (HSC): Free Stock Analysis Report Belden Inc (BDC): Free Stock Analysis Report Avery Dennison Corporation (AVY): Free Stock Analysis Report ScanSource, Inc. (SCSC): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research