Have you been paying attention to shares of
Teck Resources (TECK)
? 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 $35.99 in the previous session. Teck Resources has gained 24.7% since the start of the year compared to the 3.1% move for the Zacks Basic Materials sector and the 10.4% return for the Zacks Mining – Miscellaneous 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 October 27, 2021, Teck Resources Ltd reported EPS of $1.49 versus consensus estimate of $1.07.
For the current fiscal year, Teck Resources Ltd is expected to post earnings of $5.03 per share on $10.82 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $3.13 per share on $11.75 billion in revenues. This represents a year-over-year change of 14.32% and 8.62%, respectively.
Valuation Metrics
Teck Resources Ltd 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 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.
Teck Resources Ltd has a Value Score of B. The stock’s Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 7.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 12.2X versus its peer group’s average of 10.9X. Additionally, the stock has a PEG ratio of 0.19. 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, Teck Resources Ltd currently has a Zacks Rank of #1 (Strong 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 Teck Resources Ltd meets the list of requirements. Thus, it seems as though Teck Resources Ltd shares could have a bit more room to run in the near term.
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