Have you been paying attention to shares of CVS Health (CVS)? Shares have been on the move with the stock up 5.4% over the past month. The stock hit a new 52-week high of $106.93 in the previous session. CVS Health has gained 33.8% since the start of the year compared to the -1.1% gain for the Zacks Medical sector and the -0.7% return for the Zacks Medical Services 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, CVS Health reported EPS of $2.57 versus consensus estimate of $2.21 while it beat the consensus revenue estimate by 6.41%.
For the current fiscal year, CVS Health is expected to post earnings of $7.46 per share on $409 in revenues. This represents a 10.52% change in EPS on a 1.72% change in revenues. For the next fiscal year, the company is expected to earn $8.39 per share on $425.13 in revenues. This represents a year-over-year change of 12.49% and 3.94%, respectively.
Valuation Metrics
CVS Health 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.
CVS Health has a Value Score of A. The stock's Growth and Momentum Scores are C and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 14.2X current fiscal year EPS estimates, which is not in-line with the peer industry average of 15.9X. On a trailing cash flow basis, the stock currently trades at 7.1X versus its peer group's average of 10.3X. Additionally, the stock has a PEG ratio of 1.04. This is good enough to put the company in the top echelon of all stocks we cover from a value perspective, making CVS Health an interesting choice for value investors.
Zacks Rank
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, CVS Health currently has a Zacks Rank of #2 (Buy) thanks to a solid earnings estimate revision trend.
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 CVS Health fits the bill. Thus, it seems as though CVS Health shares could have a bit more room to run in the near term.
How Does CVS Stack Up to the Competition?
Shares of CVS 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 Labcorp Holdings Inc. (LH). LH has a Zacks Rank of #2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of D.
Earnings were strong last quarter. Labcorp Holdings Inc. beat our consensus estimate by 3.91%, and for the current fiscal year, LH is expected to post earnings of $18.00 per share on revenue of $14.71 billion.
Shares of Labcorp Holdings Inc. have gained 4.1% over the past month, and currently trade at a forward P/E of 15.31X and a P/CF of 11.1X.
The Medical Services industry may rank in the bottom 64% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for CVS and LH, even beyond their own solid fundamental situation.
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CVS Health Corporation (CVS): Free Stock Analysis Report
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This article originally published on Zacks Investment Research (zacks.com).