Martek Biosciences Corporation (MATK) recently posted a solid fiscal first quarter and saw its share price gain upward momentum following the release of the results. Revenues, which increased by 18% year-over-year, were a record $82.9 million. Analysts lifted their earnings forecasts in response the strong quarter.
Full Analysis
Martek Biosciences Corporation engages in the development and commercialization of novel products from microalgae, fungi, and other microbes primarily in the United States. The company offers life'sDHA, a vegetarian source of the omega-3 fatty acid DHA for use in infant formula, perinatal products, foods and beverages, and dietary supplements; and life'sARA, a vegetarian source of the omega-6 fatty acid ARA for use in infant formula.
Its products include nutritional oils used in infant formula, nutritional supplements, and food and beverage fortification ingredients. The company's nutritional oils consist of fatty acid components, such as docosahexaenoic acid (DHA) and arachidonic acid (ARA). DHA and ARA enhance mental and visual development in infants, as well as enable proper functioning of brain and reduce the risk of cardiovascular disease.
As was the case when Martek posted fiscal fourth-quarter results, shares of MATK jumped on positive first-quarter numbers.
The company’s first-quarter report was released last week, which included record revenues of $82.9 million, an 18% increase on a year-over-year basis. Net income was $8.7 million, which soared past the previous year’s $2.8 million. On an earnings per share basis, the company posted 26 cents, which topped the consensus estimate of 22 cents.
Commenting on the quarter, Chief Executive Officer Steve Dubin said, "The results for the first quarter show a solid start to fiscal 2008 and reflect our continued execution of our business plan. During the first quarter, Martek increased overall and non-infant formula revenues and achieved margin, earnings and cash flow growth. Furthermore, several new customers launched products with life'sDHA(TM) and an existing customer included our nutritional oils in an expanded number of their products. These new launches, customer launches to date in the second quarter and the success of a number of products that have been introduced by some of our largest customers should bode well for growth in the non-infant formula categories in coming quarters."
The biotech issued a second-quarter guidance that ranges between 24 cents and 26 cents per share. Analysts responded by increasing their forecasts. Three out of four covering analysts upped second-quarter expectations from last week’s 23 cents per share to 25 cents. For the full year, three out of five analysts lifted last week’s projections of 94 cents per share to $1.01.
The company’s price/book of 1.7 translates into an appealing valuation and comes in well below the industry’s average of 2.6.
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Wednesday, March 12, 2008
MATK - Martek Biosciences - Three out of four covering analysts upped second-quarter expectations from last week’s
BUCY - Bucyrus Intl - blowout fourth quarter in which it earned $1.22 per share, 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 month, this year's earnings estimates have increased 34 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.
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 month, this year's earnings estimates have increased 34 cents to $5.12 per share. Eight of the nine covering analysts have raised their numbers. Earnings are slated to grow another 23% next year. The stock is cheap with a PEG ratio of 0.7.
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JOYG - Joy Global - ROE of 45% is also well above the industry’s average of 23%
Joy Global, Inc. (JOYG), a Zacks #1 Rank (Strong Buy) name, soared to a 52-week high after announcing solid fiscal first-quarter results. Shares have been trading near that level analysts boost their estimates. JOYG’s earnings per share are expected to grow by an impressive 47% over the next 3 – 5 years, which is more than double the industry’s average of 21%. The Company’s ROE of 45% is also well above the industry’s average of 23%.
Full Analysis
Joy Global Inc. is a worldwide mining machinery and services company. Through its market leading divisions -- P&H Mining Equipment and Joy Mining Machinery -- the Company manufactures underground and surface mining equipment and offers aftermarket-related services. P&H Mining Equipment and Joy Mining Machinery are both recognized leaders in the design, manufacture, distribution, service and enhancement of mining machinery and equipment. Joy Global's products and related services are used extensively for the mining of coal, copper, iron, gold and other mineral resources.
The a Zacks #1 Rank (Strong Buy) company recently announced fiscal first-quarter results. Earnings per share from continuing operations of 64 cents topped the year-ago 51 cents. Joy Global stated that due continued demand from the international markets and improving conditions in the U.S. coal market, orders of $870 million jumped 54% on a year-over-year basis. Net sales totaled $640 million, compared to the year-ago $560 million, marking a 14% increase.
``Our end markets remain strong and are continuing to improve. However, order lead times and capacity constraints in 2008 will delay any meaningful impact of these market conditions until our next fiscal year. But we will benefit from the Continental acquisition in 2008. As a result of the addition of Continental, we now expect full fiscal year sales of $3.1 billion to $3.3 billion,'' said Mike Sutherlin President and CEO of Joy Global. ``Operating earnings are expected to be $545 million to $585 million. This will result in earnings of $3.15 to $3.45 per fully diluted share.''
Wall Street has fiscal year forecasts pegged at $3.39 per share as seven of the fourteen covering analysts revised upward by 2% from last week’s $3.33 on the heels of a strong report. Nine out of 12 analysts increased the following year’s projections by a wider margin of 4%, from $4.03 per share to $4.20. JOYG’s earnings per share are expected to grow by an impressive 47% over the next 3 – 5 years, which is more than double the industry’s average of 21%.
The company’s shares set a new 52-high thanks to the strong first-quarter report and currently trade close to that level.
Joy Global’s return on equity (ROE) of 45% is also well above the industry’s average of 23%.
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WW - Watson Wyatt Worldwide - return on equity of 17% is ahead of industry’s average of 12%
Watson Wyatt Worldwide, Inc. (WW), a Zacks #1 Rank (Strong Buy) company, recently declared a regular quarterly cash dividend of $0.075 per common share for the quarter ended March 31, 2008. The company’s dividend yield of 0.6% is higher than the industry average. Watson Wyatt, which has been hitting 52-week highs lately and is trading near that level right now, posted a strong fiscal second quarter. Watson Wyatt’s return on equity of 17% is ahead of industry’s average of 12%, and the company’s net margin of 8.4% is above the industry’s 4%.
Full Analysis
Watson Wyatt Worldwide, Inc. designs, develops and implements human resource strategies and programs in five principal practice areas, which include benefits; technology and administration solutions; human capital consulting; insurance and financial services; and investment consulting. The company has 6,700 associates in 31 countries.
The Zacks #1 Rank (Strong Buy) company recently declared a regular quarterly cash dividend of $0.075 per common share for the quarter ended March 31, 2008. The dividend is payable on April 15, 2008, to shareholders of record at the close of business on March 31, 2008. The company’s dividend yield of 0.6% is higher than the industry average.
Watson Wyatt, which has been hitting 52-week highs lately and is trading near that level right now, posted fiscal second-quarter results in early February. Revenues of $447.0 million surpassed the previous year’s result of $366.4 million by 22% (18% constant currency). Earnings per share of 82 cents topped the year-prior 58 cents and eclipsed the consensus estimate by 17%.
“We had an outstanding quarter, as strong revenue growth across all segments produced exceptional bottom-line results,” said John Haley, president and chief executive officer. “With a diverse service portfolio, a global platform and excellent operating leverage, we are well positioned for the current economic times.”
The company noted that it expects fiscal 2008 revenues to be in the range of $1.68 billion to $1.72 billion and earnings per diluted share for the year are expected to be in the range of $3.10 to $3.15. This guidance assumes an average exchange rate of 1.95 U.S. dollars to the British pound for the third and fourth quarters of fiscal year 2008. Wall Street estimates have been increasing for the year ending June of 2008 as well as 2009.
Watson Wyatt’s return on equity of 17% is ahead of industry’s average of 12%, and the company’s net margin of 8.4% is above the industry’s 4%.
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ESL - Esterline Technologies - Look for the trend to stay strong and continue to apply pressure to the upside
Esterline Technologies Corporation (ESL) shares are flying high from the momentum of very strong first quarter results, reported on Feb 29. Income for the period more than doubled from last year. The company's stock price surged on the news and has managed to hold its gains in a tough climate. Esterline also boosted its guidance, another sign that the company is bullish on its future.
Full Analysis
Esterline Technologies Corporation provides engineered products and systems for aerospace and defense applications worldwide. Esterline Technologies sells its products through direct internal international sales force, manufacturer representatives, and distributors. The company was founded in 1967 and is based in Bellevue, Washington.
Esterline reported awesome first quarter results on Feb 29 that included an impressive doubling of its profit from the same quarter last year. Revenue for the period rose 45% to $372.4 million. The company's net income surged forward to $31 million from $12.8 million just last year. This produced earnings of $1.04 per share, which were well ahead of analyst estimates.
The company has developed quite a knack for surprising and beating analyst estimates, having done so by an average of 9 cents, or 14% over the last four quarters.
Avionic and controls sales surged to $138.5 million from $73.9 million, while revenue for the sensors and systems segment increased to $113 million from $87.8 million. Advanced materials revenue climbed to $120.9 million from $95.5 million.
The company also raised its guidance after the excellent quarterly results. It now forecasts full-year income between $3.35 to $3.50 per share, up from the previous range of $3.00 to $3.20.
The analyst community is bullish on the company as well, with three of four covering analysts increasing current-year projections within the last 30 days. This has pushed the consensus estimate higher by 29 cents to its current reading of $3.49 per share.
As previously noted, the excellent first quarter results provided the company's stock price with a very nice pop, jumping ahead by more than 7% in just one day. Since the move higher, shares have been able to sustain the gains, which is particularly impressive in this weak environment.
Moving forward, the key formation is the channel between $51 and $53 in which shares have been trading for the last 7 sessions. The short-term trend is definitely up, as the top side of the channel has already been tested numerous times. Shares have also been setting higher lows within the channel, which is another bullish signal. Look for the trend to stay strong and continue to apply pressure to the upside as shares look to break loose and head higher.
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TRMA - Trico Marine Services - current-year estimate has been on the rise, jumping 22 cents higher in the last 30 days
Trico Marine Services, Inc. (TRMA) has been the benefactor of strong international growth and very favorable international tax regulations, both of which contributed to the company's very strong fourth quarter and full-year results, reported on Feb 19. Income more than doubled from the previous quarter to $30.1 million. The company also announced that it had completed a key acquisition that would enable it to participate in the high-growth segment of underwater exploration.
Full Analysis
Trico Marine Services, Inc., provides marine support vessels to the offshore oil and gas industry. Its fleet of vessels provides a range of services to offshore oil and gas operators, including the transportation of drilling materials, supplies, and crews to drilling rigs and other offshore facilities. The company has operations in the North Sea, west Africa, Mexico, Brazil, southeast Asia, and the U.S. Gulf of Mexico. Trico Marine Services, Inc. was founded in 1993 and is headquartered in Houston, Texas.
Trico reported very strong fourth-quarter and full-year results on Feb 18. Income for the quarter totaled $30.7 million on revenue of $65 million, producing earnings of $2.08 per share, well ahead of analyst estimates. The company did not release last year's results, but income more than doubled when compared to its third quarter results.
Full-year income was $62.9 million, producing earnings of $4.16 per share.
The company cited a number of factors that drove the sharp growth in income. Its North Sea operations saw strong pricing increases. In addition, Norwegian tax charges tacked on and additional 89 cents to earnings.
The strong quarterly results mark the fourth time in four quarters that Trico has surprised and beaten estimates, having done so by an average of 20 cents, or 27%.
Trico also announced that it had completed its acquisition of Active Subsea ASA for $247 million. The company considers this a key acquisition because it will enable it to compete in the quickly growing space of under-water exploration activities that had been spurned by higher crude prices and the depletion of "easy access" crude deposits.
There are only two covering analysts for the company, but they have been bullish on the prospects of the company's future earnings. The current-year estimate has been on the rise, jumping 22 cents higher in the last 30 days and moving to its current reading of $3.27 per share. Analysts are projecting next-year earnings of $4.70 per share, which would represent a significant jump in earnings.
Naturally, this micro-cap's stock price has responded accordingly to the good news. Since the results hit the street on Feb 19 the company's shares have advanced from $33 to over $41, an impressive 24% short-term gain.
Moving forward, the focus of the chart is the wedge formation that is squeezing shares into a consolidation pattern. As shares continue to establish higher lows within the channel and apply upward pressure to the top-side of the channel, momentum is clearly in this stock's favor. Look for shares to eventually breakout from the consolidation formation and advance to the 52-week high which is close by at just above $43.
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WCRX - Warner Chilcott - Brokerage analysts raised earnings for the year in response to the fourth-quarter earnings report
Warner Chilcott found its groove by focusing on oral contraceptives and dermatology products to surprise on estimates by 15.38% in the fourth quarter. The company trades with a P/E of 12.03 and a price-to-book of 2.95.
Full Analysis
Warner Chilcott Ltd. (WCRX) is a specialty pharmaceutical company that manufactures prescription drugs in two segments: women’s healthcare and dermatology. The company's strategy is to focus on the smaller markets.
WCRX's strongest segment is in the hormonal contraceptive and hormone therapy drugs categories. In April 2006, WCRX launched Loestrin 24 Fe, an oral contraceptive with a patented 24-day dosing regimen.
In the dermatology category, the company manufactures Dovonex and Taclonex, external creams and ointments for treatment of psoriasis, and Doryx, an oral tetracycline for the treatment of acne.
Warner Chilcott, a Zacks #1 Rank (Strong Buy), is seeing the investment in the new drugs and products pay off on the bottom line. On Feb 29, the company reported fourth-quarter earnings that beat analysts' estimates by four cents, or 15.38%.
WCRX reported fourth-quarter net income of $19.7 million, or 8 cents per share, compared with a net loss of $8.5 million, or 3 cents per share in the year-ago period. Adjusted net income was 30 cents a share. Analysts' estimates had called for 26 cents per share. Revenue rose 10.3% to $227.7 million.
The quarter saw a rise in revenues of both oral contraceptives and dermatology products. Sales of oral contraceptive products increased 13.9%, aided by a 93.8% rise in filled prescriptions for Loestrin 24 FE. Loestrin 24 FE generated revenues of $41.6 million in the quarter compared to $21.5 million in the year-ago period.
Sales in the dermatology category rose 14.3%. Filled prescriptions for Taclonex increased 33.8% compared to the year-ago period. Sales of Doryx increased $4.5 million, or 16.4%, in the quarter compared with 2006. The company said the increase in Doryx sales was due to increased demand and higher average selling prices.
Brokerage analysts raised earnings for the year in response to the fourth-quarter earnings report. In the last week, four out of eight covering analysts raised by two cents to $1.28 from $1.26 per share.
WCRX surprised on estimates by 15.38% in the fourth-quarter and has surprised for the last four quarters on average of 19.71%.
The company has a P/E of 12.03 and a price-to-book of 2.95. Through the end of 2007, WCRX had an outstanding one year return on equity (ROE) of 19.98%.
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HURC - Hurco Companies - increased its huge gross margin, reporting 41% for the quarter compared to 37% in the first-quarter 2007
Hurco is cashing in on the commodities boom as metal tools are in big demand. HURC surprised on estimates three of the last four quarters by 21.05%. The company is cheap, with a P/E of only 10.96.
Full Analysis
Hurco Companies, Inc. (HURC) is an industrial technology company that produces interactive computer controls, software and computerized machine tools for the global metal cutting and metal forming industry.
Hurco, a Zacks #1 Rank (Strong Buy), has service subsidiaries around the world and manufacturing operations in Taiwan and China.
The company's customers include independent job shops and short run manufacturing operations within the aerospace, medical equipment, energy, transportation and computer equipment industries. Products are sold through independent agents and distributors in North America, Europe and Asia. The company also has direct sales forces in the United Kingdom, Germany, France, Italy, Canada, and Asia.
On Feb 28, the company reported first-quarter earnings and surprised on analysts' estimates by 35 cents. Net income increased 45% to $7.805 million, or $1.21 per share, compared to $5.395 million, or 84 cents per share, a year ago, in the year-ago period. Analysts expected 86 cents per share.
Sales and service fees for the quarter were up 30% over the first-quarter 2007. The company said the effect of a weaker U.S. dollar had a favorable impact of approximately 10% on the year-over-year comparison.
While sales in North America continued to be soft, growth was driven by strong demand in existing European markets, expansion into Eastern European markets, and increased shipments of the higher end VMX product line. Asia Pacific saw growth mainly from India, a new market targeted by the company in 2007. The effect of a weaker U.S. dollar had a favorable impact of approximately 14% in Europe and 8% in the Asia Pacific market.
New order bookings increased 30% over first-quarter 2007, with a 44% increase in European orders and a 27% increase in Asia Pacific orders. North America, which continues to be weak, fell 6%.
Hurco increased its huge gross margin, reporting 41% for the quarter compared to 37% in the first-quarter 2007. The company attributed the rise to increased sales of higher margin VMX products in European sales regions, as well as the impact of a continuing decline in the value of the U.S. dollar.
"Strong first quarter results, despite market softness in the U.S., affirm the importance of our global strategy. Europe continues to exceed expectations. Increased sales in the Asia Pacific region are a direct result of the resources we devoted to India last year to expand our presence in this key market. We will continue to monitor the U.S. market closely," said Michael Doar, Hurco's Chief Executive Officer.
Brokerage analysts responded by raising estimates for the second quarter and the full year. One out of two covering analysts raised consensus estimates for the second quarter in the last 30 days by 4 cents to 87 cents from 83 cents. One out of two covering analysts also raised for the full year in the last 30 days by an average of 15 cents to $3.65 from $3.50 per share.
The company has a P/E of 10.96, slightly below the industry average of 11.1. HURC's price-to-book is 2.49. Hurco has an excellent five year average return on equity (ROE) of 17.49%.
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