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Elevance Health, Inc. (ELV) Hit a 52 Week High, Can the Run Continue?

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Have you been paying attention to shares of Elevance Health (ELV - Free Report) ? Shares have been on the move with the stock up 17.8% over the past month. The stock hit a new 52-week high of $540.34 in the previous session. Elevance Health has gained 15.1% since the start of the year compared to the -18.7% move for the Zacks Medical sector and the -29.2% return for the Zacks Medical 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 October 19, 2022, Elevance Health reported EPS of $7.53 versus consensus estimate of $7.1 while it beat the consensus revenue estimate by 1.33%.

For the current fiscal year, Elevance Health is expected to post earnings of $28.91 per share on $155.11 billion in revenues. This represents a 11.28% change in EPS on a 13.27% change in revenues. For the next fiscal year, the company is expected to earn $32.55 per share on $163.49 billion in revenues. This represents a year-over-year change of 12.6% and 5.4%, respectively.

Valuation Metrics

Elevance Health 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.

Elevance Health has a Value Score of A. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.

In terms of its value breakdown, the stock currently trades at 18.5X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.2X. On a trailing cash flow basis, the stock currently trades at 16.8X versus its peer group's average of 12X. Additionally, the stock has a PEG ratio of 1.53. 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 look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Elevance Health 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 Elevance Health passes the test. Thus, it seems as though Elevance Health shares could have a bit more room to run in the near term.

How Does ELV Stack Up to the Competition?

Shares of ELV 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 AMN Healthcare Services Inc (AMN - Free Report) . AMN has a Zacks Rank of # 1 (Strong Buy) and a Value Score of A, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. AMN Healthcare Services Inc beat our consensus estimate by 11.82%, and for the current fiscal year, AMN is expected to post earnings of $11.27 per share on revenue of $5.12 billion.

Shares of AMN Healthcare Services Inc have gained 13.3% over the past month, and currently trade at a forward P/E of 10.65X and a P/CF of 11.6X.

The Medical Services industry is in the top 29% of all the industries we have in our universe, so it looks like there are some nice tailwinds for ELV and AMN, even beyond their own solid fundamental situation.


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