Have you been paying attention to shares of Green Brick Partners (GRBK)? Shares have been on the move with the stock up 13.5% over the past month. The stock hit a new 52-week high of $13.25 in the previous session. Green Brick Partners has gained 13.2% since the start of the year compared to the -17.9% move for the Zacks Finance sector and the -27.9% return for the Zacks Real Estate - Development 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 11, 2020, Green Brick Partners reported EPS of $0.31 versus consensus estimate of $0.27 while it beat the consensus revenue estimate by 2.85%.
Green Brick Partners 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Green Brick Partners has a Value Score of B. The stock's Growth and Momentum Scores are C and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.6X versus its peer group's average of 8.7X. 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, Green Brick Partners 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 Green Brick Partners passes the test. Thus, it seems as though Green Brick Partners shares could still be poised for more gains ahead.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.