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Pure Storage (PSTG) Soars to 52-Week High, Time to Cash Out?

·3-min read

Have you been paying attention to shares of Pure Storage (PSTG)? Shares have been on the move with the stock up 7.7% over the past month. The stock hit a new 52-week high of $34.65 in the previous session. Pure Storage has gained 47.5% since the start of the year compared to the 26.4% move for the Zacks Computer and Technology sector and the 28% return for the Zacks Computer- Storage Devices 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 November 23, 2021, Pure Storage reported EPS of $0.22 versus consensus estimate of $0.12.

For the current fiscal year, Pure Storage is expected to post earnings of $0.63 per share on $2.1 billion in revenues. This represents a 173.91% change in EPS on a 24.88% change in revenues. For the next fiscal year, the company is expected to earn $0.74 per share on $2.49 billion in revenues. This represents a year-over-year change of 18.18% and 18.18%, respectively.

Valuation Metrics

Pure Storage 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.

Pure Storage has a Value Score of F. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 53.2X current fiscal year EPS estimates. 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, Pure Storage 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 Pure Storage fits the bill. Thus, it seems as though Pure Storage shares could have a bit more room to run in the near term.

How Does Pure Storage Stack Up to the Competition?

Shares of Pure Storage have been soaring, 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 Extreme Networks (EXTR), Hewlett Packard Enterprise (HPE), and Lenovo Group (LNVGY), 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.

However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Pure Storage. Still, the fundamentals for Pure Storage are promising, and it still has potential despite being at a 52-week high.


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Pure Storage, Inc. (PSTG) : Free Stock Analysis Report
 
Extreme Networks, Inc. (EXTR) : Free Stock Analysis Report
 
Lenovo Group Ltd. (LNVGY) : Free Stock Analysis Report
 
Hewlett Packard Enterprise Company (HPE) : Free Stock Analysis Report
 
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