Shares of Stevanato Group (STVN) have been strong performers lately, with the stock up 14.9% over the past month. The stock hit a new 52-week high of $25.73 in the previous session. Stevanato Group has gained 42.7% since the start of the year compared to the -3.6% move for the Zacks Medical sector and the -0.1% return for the Zacks Medical - Drugs 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 March 2, 2023, Stevanato reported EPS of $0.19 versus consensus estimate of $0.16 while it beat the consensus revenue estimate by 9.24%.
For the current fiscal year, Stevanato is expected to post earnings of $0.64 per share on $1.16 billion in revenues. This represents an 8.47% change in EPS on a 12.48% change in revenues. For the next fiscal year, the company is expected to earn $0.71 per share on $1.28 billion in revenues. This represents a year-over-year change of 11.88% and 10.41%, respectively.
Stevanato 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Stevanato has a Value Score of C. 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 40.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 12.3X. On a trailing cash flow basis, the stock currently trades at 33.9X versus its peer group's average of 10.6X. 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, Stevanato currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
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 Stevanato fits the bill. Thus, it seems as though Stevanato shares could have a bit more room to run in the near term.
How Does STVN Stack Up to the Competition?
Shares of STVN have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Catalyst Pharmaceuticals, Inc. (CPRX). CPRX has a Zacks Rank of # 1 (Strong Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of A.
Earnings were strong last quarter. Catalyst Pharmaceuticals, Inc. beat our consensus estimate by 4.76%, and for the current fiscal year, CPRX is expected to post earnings of $1.42 per share on revenue of $381.02 million.
Shares of Catalyst Pharmaceuticals, Inc. have gained 8.2% over the past month, and currently trade at a forward P/E of 11.82X and a P/CF of 20.64X.
The Medical - Drugs industry is in the top 39% of all the industries we have in our universe, so it looks like there are some nice tailwinds for STVN and CPRX, even beyond their own solid fundamental situation.
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