Is Spire stock a buy or sell as shares trade sideways despite the Q4 beat?

By: Motiur Rahman
Motiur Rahman
Md Motiur enjoys researching how companies are solving challenges the world will face over the coming decades. In his… read more.
on Nov 22, 2021
  • Spire stock on Monday edged slightly lower before bouncing back to surge 1.38%.
  • The company reported its most recent quarterly results before markets opened, beating expectations.
  • It offers underwhelming growth prospects despite the exciting valuation.

On Monday, Spire Inc. (NYSE:SR) shares swang to a net gain of about 1.38% after edging lower earlier in the morning session. The company reported its most recent quarterly results before markets opened, beating the consensus for analyst expectations on revenue and earnings.

Spire posted fiscal fourth-quarter non-GAAP earnings per share of -$0.32, surpassing the consensus for analyst expectations of -$0.69. In addition, Spire’s GAAP EPS of -$0.26 exceeded the average analyst estimate of -$0.72, while revenue for the quarter increased by 15.2% from the same quarter in 2020 to $290.2 million, outperforming expectations by $35.31 million.

Could Spire be a value trap?

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From an investment perspective, Spire shares trade at compelling trailing 12-month and forward P/E ratios of 12.91 and 14.34, respectively. Therefore, value investors could find the stock as an attractive option for their portfolios.

However, with the forward P/E slightly higher than the trailing P/E, it indicates a potential decline in earnings over the next 12 months. Therefore, Spire’s current valuation could be a value trap.

Furthermore, analysts expect its EPS to plunge by nearly 60% this year before falling by a further 3.93% next year. As a result, growth investors could opt for alternatives in the market.

Source – TradingView

Technically, Spire shares seem to be trading within a gently descending channel formation in the intraday chart, indicating a slight bearish bias in the market sentiment. However, the stock recently bounced off the trendline support to halt the decline, creating an opportunity to buy.

Therefore, with shares yet to retest the trendline resistance, investors could target extended rebounds at about $63.67, or higher at $65.56, while $60.08 and $58.19 are crucial support levels.

Is Spire stock a short-term buy?

In summary, although Spire’s earnings decline indicate a perilous future, its short-term valuation still makes it an exciting buy.

Therefore, it may not be too late to pounce on its latest post-earnings bounce.

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