Have you been paying attention to shares of Esab (ESAB)? Shares have been on the move with the stock up 7.5% over the past month. The stock hit a new 52-week high of $90.76 in the previous session. Esab has gained 4.2% since the start of the year compared to the 3% move for the Zacks Industrial Products sector and the 0.3% return for the Zacks Metal Products - Procurement and Fabrication 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 November 1, 2023, Esab reported EPS of $1.08 versus consensus estimate of $0.92.

For the current fiscal year, Esab is expected to post earnings of $4.82 per share on $2.61 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $5.04 per share on $2.69 billion in revenues. This represents a year-over-year change of 10.3% and 2.87%, respectively.

Valuation Metrics

Esab 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.

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

In terms of its value breakdown, the stock currently trades at 18.7X current fiscal year EPS estimates, which is a premium to the peer industry average of 13.7X. On a trailing cash flow basis, the stock currently trades at 16.9X versus its peer group's average of 5.9X. Additionally, the stock has a PEG ratio of 1.59. 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, Esab 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 Esab fits the bill. Thus, it seems as though Esab shares could still be poised for more gains ahead.