Have you been paying attention to shares of MKS Instruments (MKSI)? Shares have been on the move with the stock up 24.3% over the past month. The stock hit a new 52-week high of $115.12 in the previous session. MKS Instruments has gained 77.6% since the start of the year compared to the 25.7% move for the Zacks Computer and Technology sector and the 64.3% 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 October 23, 2019, MKS Instruments reported EPS of $1.12 versus consensus estimate of $0.86 while it missed the consensus revenue estimate by 2.72%.
For the current fiscal year, MKS Instruments is expected to post earnings of $4.37 per share on $1.87 billion in revenues. This represents a -44.19% change in EPS on a -9.86% change in revenues. For the next fiscal year, the company is expected to earn $6.11 per share on $2.06 billion in revenues. This represents a year-over-year change of 39.73% and 9.9%, respectively.
MKS Instruments 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 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.
MKS Instruments has a Value Score of B. The stock's Growth and Momentum Scores are D and B, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 26.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 12X versus its peer group's average of 13.3X. Additionally, the stock has a PEG ratio of 2.19. 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, MKS Instruments 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 MKS Instruments passes the test. Thus, it seems as though MKS Instruments shares could have a bit more room to run in the near term.
How Does MKS Instruments Stack Up to the Competition?
Shares of MKS Instruments have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Entegris (ENTG), Fujifilm Holdings (FUJIY), and Woodward (WWD), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for MKS Instruments, even beyond its own solid fundamental situation.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
MKS Instruments, Inc. (MKSI) : Free Stock Analysis Report
Entegris, Inc. (ENTG) : Free Stock Analysis Report
Woodward, Inc. (WWD) : Free Stock Analysis Report
Fujifilm Holdings Corp. (FUJIY) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research