Have you been paying attention to shares of Materion CorporationMTRN ? Shares have been on the move with the stock up 16.05% over the past month. MTRN hit a new 52-week high of $54.40 in the previous session. Materion has gained 10.08% since the start of the year compared to the 0.79% move for the Basic Materials sector and the -0.15% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on February 15, 2018, Materion reported EPS of $0.51 versus the Zacks Consensus Estimate of $0.38 while it beat the consensus revenue estimate by 7.12%.
For the current fiscal year, Materion is expected to post earnings of $2.08 per share on $1.24 billion in revenues. This represents a 20.93% change in EPS on an 8.72% change in revenues. For the next fiscal year, the company is expected to earn $2.4 per share on $1.27 billion in revenues. This represents changes of 15.54% and 2.45%, respectively.
Materion may be at a 52-week high right now, but what might the future hold for MTRN? 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.
Materion has a Value Score of B. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 25.76x current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 13.6x versus its peer group's average of 8.29x. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Materion Corporation Price and Consensus
Materion Corporation Price and Consensus | Materion Corporation Quote
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Materion 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 and Style Scores of A or B, it looks as if Materion fits the bill. Thus, it seems as though MTRN shares could still be poised for more gains ahead.
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