GBX vs. WAB: Which Stock Should Value Investors Buy Now?
Have you been paying attention to shares of Sabre SABR? Shares have been on the move with the stock up 15.2% over the past month. SABR hit a new 52-week high of $25 in the previous session. Sabre has gained 12.9% since the start of the year compared to the 3.6% move for the Computer and Technology sector and the -0.5% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 1, 2018, Sabre reported EPS of $0.44 versus the Zacks Consensus Estimate of $0.41 while it beat the consensus revenue estimate by 4.85%.
For the current fiscal year, Sabre is expected to post earnings of $1.46 per share on $3.79 billion in revenues. This represents a 4.29% change in EPS on a 5.36% change in revenues. For the next fiscal year, the company is expected to earn $1.58 per share on $4 billion in revenues. This represents a year-over-year change of 8.51% and 5.42%, respectively.
Sabre may be at a 52-week high right now, but what might the future hold for SABR? 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.
Sabre has a Value Score of B. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 15.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.6X versus its peer group's average of 19X. Additionally, the stock has a PEG ratio of 2.58. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Sabre Corporation Price and Consensus
Sabre Corporation Price and Consensus | Sabre Corporation Quote
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Sabre 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 and Style Scores of A or B, it looks as if Sabre fits the bill. Thus, it seems as though SABR shares could have potential in the weeks and months to come.
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