Have you been paying attention to shares of Five9 (FIVN)? Shares have been on the move with the stock up 10.6% over the past month. The stock hit a new 52-week high of $57.9 in the previous session. Five9 has gained 17.7% since the start of the year compared to the 12.5% move for the Zacks Computer and Technology sector and the 22.5% return for the Zacks Internet - Software 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 19, 2019, Five9 reported EPS of $0.23 versus consensus estimate of $0.14.
For the current fiscal year, Five9 is expected to post earnings of $0.58 per share on $300.42 million in revenues. This represents a -3.33% change in EPS on a 16.59% change in revenues. For the next fiscal year, the company is expected to earn $0.76 per share on $350.21 million in revenues. This represents a year-over-year change of 30.15% and 16.57%, respectively.
Five9 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 has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort 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.
Five9 has a Value Score of F. 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 88.5X current fiscal year EPS estimates. 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, Five9 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 Five9 meets the list of requirements. Thus, it seems as though Five9 shares could have potential in the weeks and months to come.
How Does Five9 Stack Up to the Competition?
Shares of Five9 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 impressive, including Digital Turbine (APPS), eGain (EGAN), and Chegg (CHGG), 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.
The Zacks Industry Rank is in the top 13% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Five9, even beyond its own solid fundamental situation.
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