Transcat, Inc. (TRNS) Hits Fresh High: Is There Still Room to Run?

Have you been paying attention to shares of Transcat (NASDAQ:TRNS)? Shares have been on the move with the stock up 15.1% over the past month. The stock hit a new 52-week high of $57.74 in the previous session. Transcat has gained 65.3% since the start of the year compared to the 10.1% move for the Zacks Computer and Technology sector and the 5.5% return for the Zacks Instruments - Control 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 May 18, 2021, Transcat, Inc. reported EPS of $0.42 versus consensus estimate of $0.32.

For the current fiscal year, Transcat, Inc. is expected to post earnings of $1.3 per share on $183.53 million in revenues. This represents a 26.21% change in EPS on a 5.88% change in revenues. For the next fiscal year, the company is expected to earn $1.81 per share on $195.47 million in revenues. This represents a year-over-year change of 39.23% and 6.51%, respectively.

Valuation Metrics

Transcat, Inc. 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.

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

In terms of its value breakdown, the stock currently trades at 44.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 28.7X versus its peer group's average of 24.9X. Additionally, the stock has a PEG ratio of 5.51. 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, Transcat, Inc. 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 Transcat, Inc. fits the bill. Thus, it seems as though Transcat, Inc. shares could have potential in the weeks and months to come.

How Does Transcat, Inc. Stack Up to the Competition?

Shares of Transcat, Inc. 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 impressive, including Watts Water Technologies (NYSE:WTS), Ultra Clean Holdings (NASDAQ:UCTT), and Bruker (NASDAQ:BRKR), 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 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Transcat, Inc.even beyond its own solid fundamental situation.