Have you been paying attention to shares of Option Care (OPCH)? Shares have been on the move with the stock up 10.7% over the past month. The stock hit a new 52-week high of $34.57 in the previous session. Option Care has gained 46.4% since the start of the year compared to the 6.7% move for the Zacks Medical sector and the 4.2% return for the Zacks Medical - Outpatient and Home Healthcare industry.
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 February 26, 2025, Option Care reported EPS of $0.35 versus consensus estimate of $0.33 while it beat the consensus revenue estimate by 1.56%.
For the current fiscal year, Option Care is expected to post earnings of $1.70 per share on $5.39 billion in revenues. This represents a 38.21% change in EPS on a 7.84% change in revenues. For the next fiscal year, the company is expected to earn $1.91 per share on $5.89 billion in revenues. This represents a year-over-year change of 12.65% and 9.26%, respectively.
Option Care 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 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.
Option Care has a Value Score of B. The stock's Growth and Momentum Scores are B and A, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 20X current fiscal year EPS estimates, which is a premium to the peer industry average of 19.5X. On a trailing cash flow basis, the stock currently trades at 20.6X versus its peer group's average of 13.9X. Additionally, the stock has a PEG ratio of 1.79. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Option Care 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 Option Care passes the test. Thus, it seems as though Option Care shares could still be poised for more gains ahead.
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This article originally published on Zacks Investment Research (zacks.com).
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