Shares of Meridian Bioscience (VIVO) have been strong performers lately, with the stock up 21.8% over the past month. The stock hit a new 52-week high of $18.85 in the previous session. Meridian Bioscience has gained 87.8% since the start of the year compared to the -1.4% move for the Zacks Medical sector and the -7.4% return for the Zacks Medical - Products 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 May 8, 2020, Meridian Bioscience reported EPS of $0.23 versus consensus estimate of $0.08.
While Meridian Bioscience 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 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.
Meridian Bioscience has a Value Score of B. 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 63.3X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20X versus its peer group's average of 17.1X. 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, Meridian Bioscience 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 Meridian Bioscience passes the test. Thus, it seems as though Meridian Bioscience shares could still be poised for more gains ahead.
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