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Have you been paying attention to shares of SunCoke Energy (SXC)? Shares have been on the move with the stock up 44.6% over the past month. The stock hit a new 52-week high of $12.55 in the previous session. SunCoke Energy has gained 16.8% since the start of the year compared to the 6.7% move for the Zacks Oils-Energy sector and the 14.5% return for the Zacks Coal 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 October 31, 2024, SunCoke reported EPS of $0.36 versus consensus estimate of $0.23.
For the current fiscal year, SunCoke is expected to post earnings of $1.14 per share on $1.81 billion in revenues. This represents a 67.65% change in EPS on a -12.2% change in revenues. For the next fiscal year, the company is expected to earn $0.71 per share on $1.39 billion in revenues. This represents a year-over-year change of -37.72% and -23.24%, respectively.
Valuation Metrics
SunCoke 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 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.
SunCoke has a Value Score of A. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 11X current fiscal year EPS estimates, which is not in-line with the peer industry average of 11X. On a trailing cash flow basis, the stock currently trades at 5.2X versus its peer group's average of 5.1X. 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, SunCoke currently has a Zacks Rank of #2 (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 SunCoke meets the list of requirements. Thus, it seems as though SunCoke shares could have potential in the weeks and months to come.