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 4, 2021, Vector reported EPS of $0.63 versus consensus estimate of $0.25.
For the current fiscal year, Vector is expected to post earnings of $1.5 per share on $2.54 billion in revenues. This represents a 150% change in EPS on a 26.74% change in revenues. For the next fiscal year, the company is expected to earn $1.25 per share on $2.5 billion in revenues. This represents a year-over-year change of -16.67% and -1.6%, respectively.
Vector 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.
Vector 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 10.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 14.9X versus its peer group's average of 9.4X. 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, Vector currently has a Zacks Rank of #1 (Strong 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 Vector passes the test. Thus, it seems as though Vector shares could still be poised for more gains ahead.
Tech IPOs With Massive Profit Potential: Last years top IPOs surged as much as 299% within the first two months. With record amounts of cash flooding into IPOs and a record-setting stock market, this year could be even more lucrative.See Zacks’ Hottest Tech IPOs Now >>
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
Vector Group Ltd. (VGR): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research