Is OraSure Technologies (OSUR) a Great Value Stock Right Now?

Have you been paying attention to shares of Phibro Animal Health (PAHC)? Shares have been on the move with the stock up 5.2% over the past month. The stock hit a new 52-week high of $25.61 in the previous session. Phibro Animal Health has gained 120.6% since the start of the year compared to the 4.7% move for the Zacks Medical sector and the 15% return for the Zacks Medical - 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 6, 2024, Phibro reported EPS of $0.35 versus consensus estimate of $0.23 while it missed the consensus revenue estimate by 6.25%.

For the current fiscal year, Phibro is expected to post earnings of $1.55 per share on $1.08 billion in revenues. This represents a 31.09% change in EPS on a 6.49% change in revenues. For the next fiscal year, the company is expected to earn $1.89 per share on $1.39 billion in revenues. This represents a year-over-year change of 21.79% and 28.16%, respectively.

Valuation Metrics

Phibro 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.

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

In terms of its value breakdown, the stock currently trades at 16.4X current fiscal year EPS estimates, which is not in-line with the peer industry average of 24.8X. On a trailing cash flow basis, the stock currently trades at 12.1X versus its peer group's average of 12X. Additionally, the stock has a PEG ratio of 0.68. 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, Phibro 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 Phibro passes the test. Thus, it seems as though Phibro shares could still be poised for more gains ahead.

How Does PAHC Stack Up to the Competition?

Shares of PAHC 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 OraSure Technologies, Inc. (OSUR). OSUR has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of D, and a Momentum Score of D.

Earnings were strong last quarter. OraSure Technologies, Inc. beat our consensus estimate by 75%, and for the current fiscal year, OSUR is expected to post earnings of -$0.05 per share on revenue of $185.4 million.

Shares of OraSure Technologies, Inc. have gained 4.7% over the past month, and currently trade at a forward P/E of 90.86X and a P/CF of 3.16X.

The Medical - Products industry is in the top 34% of all the industries we have in our universe, so it looks like there are some nice tailwinds for PAHC and OSUR, even beyond their own solid fundamental situation.

Zacks Investment Research

OraSure Technologies (OSUR) came out with a quarterly loss of $0.01 per share versus the Zacks Consensus Estimate of a loss of $0.04. This compares to earnings of $0.27 per share a year ago. These figures are adjusted for non-recurring items.

This quarterly report represents an earnings surprise of 75%. A quarter ago, it was expected that this diagnostic test maker would post earnings of $0.03 per share when it actually produced earnings of $0.07, delivering a surprise of 133.33%.

Over the last four quarters, the company has surpassed consensus EPS estimates three times.

OraSure, which belongs to the Zacks Medical - Products industry, posted revenues of $39.92 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 1.97%. This compares to year-ago revenues of $89.19 million. The company has topped consensus revenue estimates four times over the last four quarters.

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.

OraSure shares have lost about 47.7% since the beginning of the year versus the S&P 500's gain of 21.2%.

What's Next for OraSure?

While OraSure has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?

There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.

Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.

Ahead of this earnings release, the estimate revisions trend for OraSure: mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

It will be interesting to see how estimates for the coming quarters and current fiscal year change in the days ahead. The current consensus EPS estimate is -$0.03 on $38.51 million in revenues for the coming quarter and $0.05 on $186.12 million in revenues for the current fiscal year.

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Medical - Products is currently in the top 36% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.

One other stock from the same industry, Capricor Therapeutics (CAPR), is yet to report results for the quarter ended September 2024. The results are expected to be released on November 13.

This biotechnology company is expected to post quarterly loss of $0.34 per share in its upcoming report, which represents a year-over-year change of -36%. The consensus EPS estimate for the quarter has been revised 0.5% lower over the last 30 days to the current level.

Capricor Therapeutics' revenues are expected to be $4.04 million, down 34.8% from the year-ago quarter.

Zacks Investment Research