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Green Brick Partners (GRBK) Hits Fresh High: Is There Still Room to Run?

Shares of Green Brick Partners (GRBK) have been strong performers lately, with the stock up 8.6% over the past month. The stock hit a new 52-week high of $16.47 in the previous session. Green Brick Partners has gained 41.8% since the start of the year compared to the -16.1% move for the Zacks Finance sector and the -24.8% return for the Zacks Real Estate - Development 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 August 4, 2020, Green Brick Partners reported EPS of $0.66 versus consensus estimate of $0.46.

For the current fiscal year, Green Brick Partners is expected to post earnings of $1.93 per share on $856.78 million in revenues. This represents a 66.38% change in EPS on an 8.23% change in revenues. For the next fiscal year, the company is expected to earn $2.04 per share on $990.78 million in revenues. This represents a year-over-year change of 5.7% and 15.64%, respectively.

Valuation Metrics

Green Brick Partners 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. 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.

Green Brick Partners has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 8.4X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 13.3X versus its peer group's average of 8.7X. 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, Green Brick Partners currently has a Zacks Rank of #2 (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 Green Brick Partners fits the bill. Thus, it seems as though Green Brick Partners shares could have a bit more room to run in the near term.

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