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Shares of Boise Cascade, L.L.C. (BCC) have been strong performers lately, with the stock up 9% over the past month. The stock hit a new 52-week high of $56.67 in the previous session. Boise Cascade, L.L.C. has gained 16.3% since the start of the year compared to the 9.1% move for the Zacks Construction sector and the 6.5% return for the Zacks Building Products - Wood 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 February 22, 2021, Boise Cascade reported EPS of $1.76 versus consensus estimate of $1.1.
While Boise Cascade has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? 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.
Boise Cascade has a Value Score of A. 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 11X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 6.4X versus its peer group's average of 12.4X. Additionally, the stock has a PEG ratio of 1.07. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Boise Cascade 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 Boise Cascade passes the test. Thus, it seems as though Boise Cascade shares could still be poised for more gains ahead.
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