Shares of Frontdoor (FTDR) have been strong performers lately, with the stock up 12.2% over the past month. The stock hit a new 52-week high of $62 in the previous session. Frontdoor has gained 12.2% since the start of the year compared to the 14.8% move for the Zacks Construction sector and the 17.3% return for the Zacks Building Products - Miscellaneous 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 November 4, 2024, Frontdoor reported EPS of $1.38 versus consensus estimate of $1.03 while it missed the consensus revenue estimate by 0.1%.
For the current fiscal year, Frontdoor is expected to post earnings of $3.19 per share on $1.83 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $3.65 per share on $1.95 billion in revenues. This represents a year-over-year change of 1.35% and 6.39%, respectively.
Frontdoor 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.
Frontdoor has a Value Score of D. The stock's Growth and Momentum Scores are B and C, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 19.2X current fiscal year EPS estimates, which is a premium to the peer industry average of 18.2X. On a trailing cash flow basis, the stock currently trades at 21.9X versus its peer group's average of 14.8X. 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 consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Frontdoor 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 Frontdoor passes the test. Thus, it seems as though Frontdoor shares could still be poised for more gains ahead.
Shares of FTDR 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 Owens Corning Inc (OC). OC has a Zacks Rank of # 2 (Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of B.
Earnings were strong last quarter. Owens Corning Inc beat our consensus estimate by 9.23%, and for the current fiscal year, OC is expected to post earnings of $15.85 per share on revenue of $10.91 billion.
Shares of Owens Corning Inc have gained 12.3% over the past month, and currently trade at a forward P/E of 12.06X and a P/CF of 8.85X.
The Building Products - Miscellaneous industry may rank in the bottom 69% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for FTDR and OC, even beyond their own solid fundamental situation.
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