We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Quest Diagnostics Incorporated (DGX) Hit a 52 Week High, Can the Run Continue?
Read MoreHide Full Article
Have you been paying attention to shares of Quest Diagnostics (DGX - Free Report) ? Shares have been on the move with the stock up 6.9% over the past month. The stock hit a new 52-week high of $151.78 in the previous session. Quest Diagnostics has gained 8.9% since the start of the year compared to the 7.3% move for the Zacks Medical sector and the 11% return for the Zacks Medical - Outpatient and Home Healthcare 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 23, 2024, Quest Diagnostics reported EPS of $2.35 versus consensus estimate of $2.31 while it beat the consensus revenue estimate by 0.5%.
For the current fiscal year, Quest Diagnostics is expected to post earnings of $8.88 per share on $9.52 billion in revenues. This represents a 1.95% change in EPS on a 2.87% change in revenues. For the next fiscal year, the company is expected to earn $9.57 per share on $10.07 billion in revenues. This represents a year-over-year change of 7.77% and 5.83%, respectively.
Valuation Metrics
Quest Diagnostics 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.
Quest Diagnostics has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 16.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 24.1X. On a trailing cash flow basis, the stock currently trades at 11.8X versus its peer group's average of 14.2X. Additionally, the stock has a PEG ratio of 2.74. 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, Quest Diagnostics 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 Quest Diagnostics passes the test. Thus, it seems as though Quest Diagnostics shares could still be poised for more gains ahead.
How Does DGX Stack Up to the Competition?
Shares of DGX 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 Option Care Health, Inc. (OPCH - Free Report) . OPCH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Option Care Health, Inc. beat our consensus estimate by 7.14%, and for the current fiscal year, OPCH is expected to post earnings of $1.22 per share on revenue of $4.83 billion.
Shares of Option Care Health, Inc. have gained 18.2% over the past month, and currently trade at a forward P/E of 25.98X and a P/CF of 16.78X.
The Medical - Outpatient and Home Healthcare 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 DGX and OPCH, even beyond their own solid fundamental situation.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Quest Diagnostics Incorporated (DGX) Hit a 52 Week High, Can the Run Continue?
Have you been paying attention to shares of Quest Diagnostics (DGX - Free Report) ? Shares have been on the move with the stock up 6.9% over the past month. The stock hit a new 52-week high of $151.78 in the previous session. Quest Diagnostics has gained 8.9% since the start of the year compared to the 7.3% move for the Zacks Medical sector and the 11% return for the Zacks Medical - Outpatient and Home Healthcare 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 23, 2024, Quest Diagnostics reported EPS of $2.35 versus consensus estimate of $2.31 while it beat the consensus revenue estimate by 0.5%.
For the current fiscal year, Quest Diagnostics is expected to post earnings of $8.88 per share on $9.52 billion in revenues. This represents a 1.95% change in EPS on a 2.87% change in revenues. For the next fiscal year, the company is expected to earn $9.57 per share on $10.07 billion in revenues. This represents a year-over-year change of 7.77% and 5.83%, respectively.
Valuation Metrics
Quest Diagnostics 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.
Quest Diagnostics has a Value Score of A. The stock's Growth and Momentum Scores are B and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 16.9X current fiscal year EPS estimates, which is not in-line with the peer industry average of 24.1X. On a trailing cash flow basis, the stock currently trades at 11.8X versus its peer group's average of 14.2X. Additionally, the stock has a PEG ratio of 2.74. 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, Quest Diagnostics 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 Quest Diagnostics passes the test. Thus, it seems as though Quest Diagnostics shares could still be poised for more gains ahead.
How Does DGX Stack Up to the Competition?
Shares of DGX 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 Option Care Health, Inc. (OPCH - Free Report) . OPCH has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Option Care Health, Inc. beat our consensus estimate by 7.14%, and for the current fiscal year, OPCH is expected to post earnings of $1.22 per share on revenue of $4.83 billion.
Shares of Option Care Health, Inc. have gained 18.2% over the past month, and currently trade at a forward P/E of 25.98X and a P/CF of 16.78X.
The Medical - Outpatient and Home Healthcare 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 DGX and OPCH, even beyond their own solid fundamental situation.