Have you been paying attention to shares of World Wrestling Entertainment (NYSE:WWE) ? Shares have been on the move with the stock up 11.7% over the past month. WWE hit a new 52-week high of $41.60 in the previous session. World Wrestling Entertainment has gained 35.4% since the start of the year compared to the -2% move for the Consumer Discretionary sector and the -2% year-to-date return for its peer group.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on May 3, 2018, World Wrestling Entertainment reported EPS of $0.18 versus the Zacks Consensus Estimate of $0.13 while it missed the consensus revenue estimate by 2.11%.
For the current fiscal year, World Wrestling Entertainment is expected to post earnings of $0.86 per share on $848.95 million in revenues. This represents a 32.31% change in EPS on a 5.99% change in revenues. For the next fiscal year, the company is expected to earn $1.1 per share on $903.27 million in revenues. This represents a year-over-year change of 27.44% and 6.4%, respectively.
Valuation Metrics
World Wrestling Entertainment may be at a 52-week high right now, but what might the future hold for WWE? 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.
World Wrestling Entertainment has a Value Score of D. The stock's Growth and Momentum Scores are A and A, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 47.9X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 25X versus its peer group's average of 9.5X. 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, World Wrestling Entertainment 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 and Style Scores of A or B, it looks as if World Wrestling Entertainment meets the list of requirements. Thus, it seems as though WWE shares could have a bit more room to run in the near term.
World Wrestling Entertainment, Inc. (WWE): Free Stock Analysis Report
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