BUCY - Bucyrus Intl - blowout fourth quarter, a full 38.6% ahead of estimates

Bucyrus International is thriving despite a poor economic backdrop. Booming commodities markets and strong global growth are accounting for the success. Over the past four quarters, the company has posted an average surprise of 15.6%. During the past two months, this year's earnings estimates have increased 27 cents to $5.12 per share.

Full Analysis

Bucyrus International, Inc. (BUCY) engages in designing, manufacturing, and marketing draglines, electric mining shovels, and rotary blast-hole drills used for surface mining. It also provides aftermarket replacement parts and services for its machines.

The company's equipments are used for mining copper, thermal coal, metallurgical coal, oil sands, iron ore, molybdenum, phosphate, bauxite, gold, diamonds, and uranium. Bucyrus International also offers engineered replacement parts, maintenance and repair labor, technical advice, refurbishment and relocation of machines, structural and mechanical engineering, and non-destructive testing.
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BUCY reported a blowout fourth quarter in which it earned $1.22 per share, a full 38.6% ahead of estimates. Sales more than doubled to about $548 million. The overall increase in surface mining sales reflected the ongoing global demand for Bucyrus' products and services, which continues to be driven by the sustained strength in markets for commodities mined by Bucyrus machines.

It also raised guidance for 2008. Bucyrus said in its conference call with investors that it expects 2008 revenue of $2.35 billion to $2.45 billion. Analysts expected revenue of $2.25 billion for the year, on average.

Not surprisingly, analysts had great things to say about the company. Baird's Robert F. McCarthy maintained his "Outperform" rating for the stock, but raised his price target by $9 to $130. He estimates the company's EBITDA forecast implies earnings of about $4.75 to $5.50 per share for the year. Analysts, on average, expect a 2008 profit of $4.66 per share.

Seth R. Weber of Banc of America Securities backed his "Buy" rating for the South Milwaukee, Wis., company and boosted his price target by $4 to $108, saying he expects Bucyrus to benefit from strong commodity prices and growing demand for the commodities from emerging economies.

Over the past four quarters, the company has posted an average surprise of 15.6%. During the past 60 days, this year's earnings estimates have increased 27 cents to $5.12 per share. Earnings are slated to grow another 25.7% next year. The stock is cheap with a PEG ratio of 1.0.

Content Courtesy: Zacks Investment Research

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