Have you been paying attention to shares of Kulicke and Soffa Industries (KLIC)? Shares have been on the move with the stock up 13.3% over the past month. The stock hit a new 52-week high of $29.94 in the previous session. Kulicke and Soffa Industries has gained 4.9% since the start of the year compared to the 30.5% move for the Zacks Computer and Technology sector and the 36.3% return for the Zacks Electronics – Manufacturing Machinery 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 July 29, 2020, Kulicke and Soffa reported EPS of $0.21 versus consensus estimate of $0.15.
For the current fiscal year, Kulicke and Soffa is expected to post earnings of $1.62 per share on $622.5 million in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $2.93 per share on $864.6 million in revenues. This represents a year-over-year change of 68.75% and 38.89%, respectively.
Kulicke and Soffa 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. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Kulicke and Soffa has a Value Score of C. The stock’s Growth and Momentum Scores are C and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 17.6X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 35.9X versus its peer group’s average of 30.7X. 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Kulicke and Soffa 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 Kulicke and Soffa fits the bill. Thus, it seems as though Kulicke and Soffa shares could still be poised for more gains ahead.
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Kulicke and Soffa Industries, Inc. (KLIC) : Free Stock Analysis Report
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