Coherent Corp. (COHR) Hit a 52 Week High, Can the Run Continue?

Shares of Coherent (COHR) have been strong performers lately, with the stock up 5.2% over the past month. The stock hit a new 52-week high of $111.66 in the previous session. Coherent has gained 152.7% since the start of the year compared to the 27.5% move for the Zacks Business Services sector and the 52.7% return for the Zacks Technology 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 November 6, 2024, Coherent reported EPS of $0.74 versus consensus estimate of $0.63 while it beat the consensus revenue estimate by 2.43%.

For the current fiscal year, Coherent is expected to post earnings of $2.91 per share on $5.54 billion in revenues. This represents a 74.25% change in EPS on a 17.64% change in revenues. For the next fiscal year, the company is expected to earn $4.23 per share on $6.14 billion in revenues. This represents a year-over-year change of 45.46% and 10.81%, respectively.

Valuation Metrics

Coherent 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.

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

In terms of its value breakdown, the stock currently trades at 37.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 26.7X. On a trailing cash flow basis, the stock currently trades at 19.6X versus its peer group's average of 12.7X. Additionally, the stock has a PEG ratio of 0.86. 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, Coherent currently has a Zacks Rank of #1 (Strong 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 Coherent meets the list of requirements. Thus, it seems as though Coherent shares could still be poised for more gains ahead.

How Does COHR Stack Up to the Competition?

Shares of COHR 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 Duolingo, Inc. (DUOL). DUOL has a Zacks Rank of # 2 (Buy) and a Value Score of F, a Growth Score of A, and a Momentum Score of A.

Earnings were strong last quarter. Duolingo, Inc. beat our consensus estimate by 36.11%, and for the current fiscal year, DUOL is expected to post earnings of $3.04 per share on revenue of $741.98 million.

Shares of Duolingo, Inc. have gained 12.8% over the past month, and currently trade at a forward P/E of 161.56X and a P/CF of 600.18X.

The Technology Services industry is in the top 26% of all the industries we have in our universe, so it looks like there are some nice tailwinds for COHR and DUOL, even beyond their own solid fundamental situation.

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