Have you been paying attention to shares of Premier, Inc. (PINC)? Shares have been on the move with the stock up 15.2% over the past month. The stock hit a new 52-week high of $23.56 in the previous session. Premier, Inc. has gained 3.6% since the start of the year compared to the 1% move for the Zacks Medical sector and the -6.1% return for the Zacks Medical Services 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 November 5, 2024, Premier reported EPS of $0.34 versus consensus estimate of $0.26.
For the current fiscal year, Premier is expected to post earnings of $1.29 per share on $986.69 million in revenues. This represents a -45.34% change in EPS on a -26.71% change in revenues. For the next fiscal year, the company is expected to earn $1.35 per share on $1 billion in revenues. This represents a year-over-year change of 4.65% and 1.56%, respectively.
Valuation Metrics
Premier 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 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.
Premier has a Value Score of A. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 18X current fiscal year EPS estimates, which is a premium to the peer industry average of 17.8X. On a trailing cash flow basis, the stock currently trades at 6.4X versus its peer group's average of 11.2X. Additionally, the stock has a PEG ratio of 8.8. 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, Premier currently has a Zacks Rank of #1 (Strong 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 Premier fits the bill. Thus, it seems as though Premier shares could still be poised for more gains ahead.
How Does PINC Stack Up to the Competition?
Shares of PINC 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 Cencora, Inc. (COR). COR has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of B.
Earnings were strong last quarter. Cencora, Inc. beat our consensus estimate by 4.05%, and for the current fiscal year, COR is expected to post earnings of $14.90 per share on revenue of $315.61 billion.
Shares of Cencora, Inc. have gained 4.6% over the past month, and currently trade at a forward P/E of 16.39X and a P/CF of 11.28X.
The Medical Services industry may rank in the bottom 51% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for PINC and COR, even beyond their own solid fundamental situation.
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Today, See These 5 Potential Home Runs >>Premier, Inc. (PINC) : Free Stock Analysis Report
Cencora, Inc. (COR) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
