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Vista Outdoor (VSTO) Soars to 52-Week High, Time to Cash Out?

Have you been paying attention to shares of Vista Outdoor (VSTO)? Shares have been on the move with the stock up 25.5% over the past month. The stock hit a new 52-week high of $52.11 in the previous session. Vista Outdoor has gained 10.8% since the start of the year compared to the 0.4% move for the Zacks Consumer Discretionary sector and the -1.5% return for the Zacks Leisure and Recreation Products 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 November 4, 2021, Vista Outdoor reported EPS of $2.41 versus consensus estimate of $1.77.

For the current fiscal year, Vista Outdoor is expected to post earnings of $7.88 per share on $2.94 billion in revenues. This represents a 115.3% change in EPS on a 32.27% change in revenues. For the next fiscal year, the company is expected to earn $6.88 per share on $3.08 billion in revenues. This represents a year-over-year change of -12.71% and 4.5%, respectively.

Valuation Metrics

Vista Outdoor 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.

Vista Outdoor has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 6.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 10.4X versus its peer group's average of 12.5X. 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, Vista Outdoor currently has a Zacks Rank of #1 (Strong 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 Vista Outdoor fits the bill. Thus, it seems as though Vista Outdoor shares could have a bit more room to run in the near term.

How Does Vista Outdoor Stack Up to the Competition?

Shares of Vista Outdoor have been rising, 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 looking good, including OneWater Marine (ONEW), Malibu Boats (MBUU), and Brunswick (BC), 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 11% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Vista Outdoor, even beyond its own solid fundamental situation.

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Vista Outdoor Inc. (VSTO): Free Stock Analysis Report
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