Shares of Nutanix (NTNX) have been strong performers lately, with the stock up 12.5% over the past month. The stock hit a new 52-week high of $79.9 in the previous session. Nutanix has gained 25.1% since the start of the year compared to the -4.3% move for the Zacks Computer and Technology sector and the -2.6% return for the Zacks Computers - IT Services 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 26, 2025, Nutanix reported EPS of $0.56 versus consensus estimate of $0.47 while it beat the consensus revenue estimate by 1.88%.
For the current fiscal year, Nutanix is expected to post earnings of $1.49 per share on $2.49 billion in revenues. This represents a 13.74% change in EPS on a 16% change in revenues. For the next fiscal year, the company is expected to earn $1.86 per share on $2.86 billion in revenues. This represents a year-over-year change of 24.88% and 14.83%, respectively.
Valuation Metrics
Nutanix 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 these give investors a variety of ways to comb 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.
Nutanix has a Value Score of F. The stock's Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 51.4X current fiscal year EPS estimates, which is a premium to the peer industry average of 25.7X. On a trailing cash flow basis, the stock currently trades at 122.6X versus its peer group's average of 19X. Additionally, the stock has a PEG ratio of 2.6. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Nutanix 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 Nutanix meets the list of requirements. Thus, it seems as though Nutanix shares could have a bit more room to run in the near term.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
