Cambium Networks (CMBM) Soars to 52-Week High, Time to Cash Out?
Shares of Cambium Networks (CMBM) have been strong performers lately, with the stock up 35.2% over the past month. The stock hit a new 52-week high of $22.39 in the previous session. Cambium Networks has gained 154.4% since the start of the year compared to the 29% move for the Zacks Computer and Technology sector and the -2.8% return for the Zacks Wireless National 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 August 11, 2020, Cambium Networks reported EPS of $0.16 versus consensus estimate of $0.1 while it beat the consensus revenue estimate by 2.6%.
For the current fiscal year, Cambium Networks is expected to post earnings of $0.6 per share on $263.62 million in revenues. This represents a 27.66% change in EPS on a -1.28% change in revenues. For the next fiscal year, the company is expected to earn $0.86 per share on $292.18 million in revenues. This represents a year-over-year change of 43.33% and 10.83%, respectively.
Cambium Networks 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.
Cambium Networks has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 36.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 133.6X versus its peer group's average of 8.4X. Additionally, the stock has a PEG ratio of 1.85. 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, Cambium Networks 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 Cambium Networks meets the list of requirements. Thus, it seems as though Cambium Networks shares could still be poised for more gains ahead.
How Does Cambium Networks Stack Up to the Competition?
Shares of Cambium Networks 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 solid potential picks, including China Unicom Hong Kong (CHU), KDDI Corporation Unsponsored (KDDIY), and NTT DOCOMO (DCMYY), 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 Cambium Networks. Still, the fundamentals for Cambium Networks are promising, and it still has potential despite being at a 52-week high.
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Cambium Networks Corporation (CMBM): Free Stock Analysis Report
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