Have you been paying attention to shares of Castlight Health (CSLT)? Shares have been on the move with the stock up 22.9% over the past month. The stock hit a new 52-week high of $2.36 in the previous session. Castlight Health has gained 69.2% since the start of the year compared to the 2.9% move for the Zacks Computer and Technology sector and the -0.2% return for the Zacks Internet – Software industry.
What’s Driving the Outperformance?
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 February 23, 2021, Castlight reported EPS of $0.02 versus consensus estimate of $-0.01.
Castlight 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.
Castlight has a Value Score of F. The stock’s Growth and Momentum Scores are A and B, respectively, giving the company a VGM Score of B.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Castlight 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 Castlight fits the bill. Thus, it seems as though Castlight shares could have potential in the weeks and months to come.
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