Have you been paying attention to shares of Nutanix (NTNX)? Shares have been on the move with the stock up 13.5% over the past month. The stock hit a new 52-week high of $75.8 in the previous session. Nutanix has gained 52.7% since the start of the year compared to the 28.5% move for the Zacks Computer and Technology sector and the 16.8% return for the Zacks Computers - IT Services 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 August 28, 2024, Nutanix reported EPS of $0.27 versus consensus estimate of $0.2.

For the current fiscal year, Nutanix is expected to post earnings of $1.43 per share on $2.46 billion in revenues. This represents a 9.16% change in EPS on a 14.27% change in revenues. For the next fiscal year, the company is expected to earn $1.86 per share on $2.85 billion in revenues. This represents a year-over-year change of 29.87% and 15.99%, respectively.

Valuation Metrics

Nutanix 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. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Nutanix 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 50.9X current fiscal year EPS estimates, which is a premium to the peer industry average of 30.4X. On a trailing cash flow basis, the stock currently trades at 116.6X versus its peer group's average of 23.3X. Additionally, the stock has a PEG ratio of 2.57. 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, Nutanix 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 Nutanix fits the bill. Thus, it seems as though Nutanix shares could still be poised for more gains ahead.

How Does NTNX Stack Up to the Competition?

Shares of NTNX have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is EPAM Systems, Inc. (EPAM). EPAM has a Zacks Rank of # 2 (Buy) and a Value Score of C, a Growth Score of A, and a Momentum Score of C.

Earnings were strong last quarter. EPAM Systems, Inc. beat our consensus estimate by 15.56%, and for the current fiscal year, EPAM is expected to post earnings of $11.28 per share on revenue of $4.69 billion.

Shares of EPAM Systems, Inc. have gained 30.3% over the past month, and currently trade at a forward P/E of 23.31X and a P/CF of 23.93X.

The Computers - IT Services industry is in the top 19% of all the industries we have in our universe, so it looks like there are some nice tailwinds for NTNX and EPAM, even beyond their own solid fundamental situation.

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