Have you been paying attention to shares of Castle Biosciences, Inc. (CSTL)? Shares have been on the move with the stock up 22% over the past month. The stock hit a new 52-week high of $34.73 in the previous session. Castle Biosciences, Inc. has gained 60.7% since the start of the year compared to the 3.1% move for the Zacks Medical sector and the -2.7% return for the Zacks Medical - Biomedical and Genetics 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 August 5, 2024, Castle Biosciences reported EPS of $0.31 versus consensus estimate of $-0.16 while it beat the consensus revenue estimate by 24.38%.
For the current fiscal year, Castle Biosciences is expected to post earnings of -$0.59 per share on $299.8 million in revenues. This represents a 72.43% change in EPS on a 36.41% change in revenues. For the next fiscal year, the company is expected to earn -$2.15 per share on $279.54 million in revenues. This represents a year-over-year change of -265.25% and -6.76%, respectively.
Castle Biosciences 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.
Castle Biosciences has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Castle Biosciences 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 Castle Biosciences passes the test. Thus, it seems as though Castle Biosciences shares could still be poised for more gains ahead.
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