Have you been paying attention to shares of Weave Communications, Inc. (WEAV)? Shares have been on the move with the stock up 22% over the past month. The stock hit a new 52-week high of $16.16 in the previous session. Weave Communications, Inc. has gained 39.1% since the start of the year compared to the 36.5% move for the Zacks Computer and Technology sector and the 33.3% return for the Zacks Communication - Network Software 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 30, 2024, Weave Communications reported EPS of $0.03 versus consensus estimate of $0.

For the current fiscal year, Weave Communications is expected to post earnings of $0.04 per share on $203.52 million in revenues. This represents a 133.33% change in EPS on a 19.39% change in revenues. For the next fiscal year, the company is expected to earn $0.11 per share on $237.01 million in revenues. This represents a year-over-year change of 175% and 16.45%, respectively.

Valuation Metrics

Weave Communications 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.

Weave Communications has a Value Score of D. 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 375.3X current fiscal year EPS estimates, which is a premium to the peer industry average of 24X. On a trailing cash flow basis, the stock currently trades at 5X versus its peer group's average of 7.1X. 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, Weave Communications 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 Weave Communications meets the list of requirements. Thus, it seems as though Weave Communications shares could have a bit more room to run in the near term.

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