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Have you been paying attention to shares of Funko (FNKO)? Shares have been on the move with the stock up 21.9% over the past month. The stock hit a new 52-week high of $27.2 in the previous session. Funko has gained 152.9% since the start of the year compared to the 1.2% move for the Zacks Consumer Discretionary sector and the -12.5% return for the Zacks Consumer Products - Discretionary 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 6, 2021, Funko-A reported EPS of $0.24 versus consensus estimate of $0.1 while it beat the consensus revenue estimate by 5.7%.
For the current fiscal year, Funko-A is expected to post earnings of $1.09 per share on $884.97 million in revenues. This represents a 194.59% change in EPS on a 35.62% change in revenues. For the next fiscal year, the company is expected to earn $1.25 per share on $971.14 million in revenues. This represents a year-over-year change of 14.25% and 9.74%, respectively.
Funko-A 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 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Funko-A 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 24X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 22X versus its peer group's average of 12.4X. Additionally, the stock has a PEG ratio of 0.88. 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, Funko-A 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 Funko-A passes the test. Thus, it seems as though Funko-A shares could still be poised for more gains ahead.
How Does Funko-A Stack Up to the Competition?
Shares of Funko-A have been moving higher, 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 solid potential picks, including Alto Ingredients (ALTO), Lifetime Brands (LCUT), and SnapOn (SNA), 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.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Funko-A. Still, the fundamentals for Funko-A are promising, and it still has potential despite being at a 52-week high.
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Funko, Inc. (FNKO) : Free Stock Analysis Report
SnapOn Incorporated (SNA) : Free Stock Analysis Report
Lifetime Brands, Inc. (LCUT) : Free Stock Analysis Report
Alto Ingredients, Inc. (ALTO) : Free Stock Analysis Report
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