GE Healthcare Stock: Is GEHC Outperforming the Healthcare Sector?

Have you been paying attention to shares of ICU Medical (ICUI)? Shares have been on the move with the stock up 15.2% over the past month. The stock hit a new 52-week high of $181.34 in the previous session. ICU Medical has gained 80% since the start of the year compared to the 12.1% move for the Zacks Medical sector and the 15.9% return for the Zacks Medical - Products 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 7, 2024, ICU Medical reported EPS of $1.56 versus consensus estimate of $0.98 while it beat the consensus revenue estimate by 7%.

For the current fiscal year, ICU Medical is expected to post earnings of $5.16 per share on $2.29 billion in revenues. This represents a -23.67% change in EPS on a 1.45% change in revenues. For the next fiscal year, the company is expected to earn $6.58 per share on $2.36 billion in revenues. This represents a year-over-year change of 27.52% and 2.79%, respectively.

Valuation Metrics

ICU Medical 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 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.

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

In terms of its value breakdown, the stock currently trades at 34.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 25.3X. On a trailing cash flow basis, the stock currently trades at 11.7X versus its peer group's average of 11.9X. 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, ICU Medical 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 ICU Medical fits the bill. Thus, it seems as though ICU Medical shares could have potential in the weeks and months to come.

How Does ICUI Stack Up to the Competition?

Shares of ICUI 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 Koninklijke Philips N.V. (PHG). PHG has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of C.

Earnings were strong last quarter. Koninklijke Philips N.V. beat our consensus estimate by 7.32%, and for the current fiscal year, PHG is expected to post earnings of $1.51 per share on revenue of $19.99 billion.

Shares of Koninklijke Philips N.V. have gained 5.6% over the past month, and currently trade at a forward P/E of 20.52X and a P/CF of 10.73X.

The Medical - Products 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 ICUI and PHG, even beyond their own solid fundamental situation.

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