A strong stock as of late has been The Pennant Group, Inc. (PNTG). Shares have been marching higher, with the stock up 23.1% over the past month. The stock hit a new 52-week high of $38.54 in the previous session. The Pennant Group has gained 32.7% since the start of the year compared to the 1.1% gain for the Zacks Medical sector and the 17.8% return for the Zacks Medical - Outpatient and Home Healthcare 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 May 6, 2026, The Pennant Group reported EPS of $0.32 versus consensus estimate of $0.31.
For the current fiscal year, The Pennant Group is expected to post earnings of $1.35 per share on $1.17 in revenues. This represents a 14.41% change in EPS on a 23.25% change in revenues. For the next fiscal year, the company is expected to earn $1.53 per share on $1.27 in revenues. This represents a year-over-year change of 14.07% and 8.48%, respectively.
Valuation Metrics
While The Pennant Group has moved to its 52-week high over the past few weeks, investors need to be asking, what is next for the company? 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 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.
The Pennant Group has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 27.8X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.1X. On a trailing cash flow basis, the stock currently trades at 29.2X versus its peer group's average of 15X. Additionally, the stock has a PEG ratio of 2.14. 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, The Pennant Group currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
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 The Pennant Group meets the list of requirements. Thus, it seems as though The Pennant Group shares could have a bit more room to run in the near term.
How Does PNTG Stack Up to the Competition?
Shares of PNTG 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 DaVita Inc. (DVA). DVA has a Zacks Rank of #1 (Strong Buy) and a Value Score of A, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. DaVita Inc. beat our consensus estimate by 19.09%, and for the current fiscal year, DVA is expected to post earnings of $15.07 per share on revenue of $14.3 billion.
Shares of DaVita Inc. have gained 16.9% over the past month, and currently trade at a forward P/E of 15.13X and a P/CF of 10.5X.
The Medical - Outpatient and Home Healthcare industry is in the top 18% of all the industries we have in our universe, so it looks like there are some nice tailwinds for PNTG and DVA, even beyond their own solid fundamental situation.
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This article originally published on Zacks Investment Research (zacks.com).