Have you been paying attention to shares of Charles River Laboratories International (CRL)? Shares have been on the move with the stock up 22.6% over the past month. The stock hit a new 52-week high of $145.23 in the previous session. Charles River Laboratories International has gained 27.8% since the start of the year compared to the 8.4% move for the Zacks Medical sector and the 20.5% return for the Zacks Medical Services 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 February 13, 2019, Charles River reported EPS of $1.49 versus consensus estimate of $1.39 while it beat the consensus revenue estimate by 1.94%.
For the current fiscal year, Charles River is expected to post earnings of $6.48 per share on $2.59 billion in revenues. This represents a 7.46% change in EPS on a 14.2% change in revenues. For the next fiscal year, the company is expected to earn $7.36 per share on $2.81 billion in revenues. This represents a year-over-year change of 13.66% and 8.45%, respectively.
Charles River 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.
Charles River has a Value Score of C. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 15.3X versus its peer group's average of 18.3X. Additionally, the stock has a PEG ratio of 1.86. 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, Charles River 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 (Buy) and Style Scores of A or B, it looks as if Charles River passes the test. Thus, it seems as though Charles River shares could have potential in the weeks and months to come.
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
Charles River Laboratories International, Inc. (CRL) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research