CIRCOR International, Inc.'s (CIR) share price has had an amazing year in a tough environment, rallying from a low point just above $35 to a high-water mark of over $54. The company just reported another healthy quarter in which income was up sharply from the same period last year. Based upon the current-year earnings projection, this stock looks attractively valued relative to the overall market.
CIRCOR International, Inc. designs and manufactures valves and fluid control products both domestically and internationally. The company was founded in 1999, carries a market cap. of $835 million and is headquartered in Burlington Mass.
First-Quarter Results
CIRCOR reported very strong first-quarter results on Apr 30 that clearly demonstrate the company's strength. Revenue came in at $176.6 million, an increase of 9.5% from the same period last year. Net income was up an amazing 74% to $12.9 million, producing earnings of 76 cents per share, exactly in line with analyst expectations.
CIRCO has been in the habit of surprising and beating analyst estimates. Previous to the most recent results, CIRCO had surprised and beaten analyst estimates by an average of 4.5 cents, or 8.10%.
CIRCOR reported exceptional growth from its energy division, which posted a 10% increase in revenue, and its instrumentation and fluid control segment, which posted revenue growth of 9%.
Increased Profit Margins
CIRCOR's CEO, Bill Higgins also remarked that the company was able to achieve a higher operating margin of 13.8%, the highest reading since the company went public in 1999.
Estimates Are Up
After the solid quarter, CIRCOR boosted its earnings guidance, saying that it now expects second-quarter earnings between 74 and 83 cents. Analysts have the current-year estimate pegged at $3.23 per share, making this stock a good buy with a forward P/E multiple of 15.5X.
The Chart
As previously mentioned, CIRCOR shares have had a great year, posting consistent returns in a very challenging market. More recently, this stock has pulled back from 52-week and all-time high just above $54, and is currently pressuring a trend line that began early in the year.
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Tuesday, July 01, 2008
(CIR) - CIRCOR International - boosted its earnings guidance
(AKS) - AK Steel Holding - habit of surprising and beating analyst estimates in the last four quarters by an average of 30.79%
AK Steel Holding Corp. (AKS) shares have been trading sideways for the last three months after the company reported strong first-quarter results on Apr 22. Within the last seven days, the analyst community boosted its current-year earnings estimate by four cents to $4.85 per share. This upgrade comes ahead of the company's second-quarter earnings announcement, scheduled for July 22.
AK Steel Holding Corporation, through its subsidiaries, produces finished steel products and offers its products domestically, in Canada, Mexico and Western Europe. AK Steel was founded in 1900, carries a market cap of $7.85 billion and is headquartered in West Chester, Ohio.
AK Steel shares have been trading mostly sideways since the company reported its first-quarter results on Apr 22.
First-Quarter Results
Sales were up a little more than 4% from last year, coming in at $1.79 billion. Net income took a big step forward, increasing to $101.1 million, a 60% gain from the same period last year. This produced earnings of 90 cents per share, safely ahead of analyst estimates of 82 cents.
AK Steel has been making a habit of surprising and beating analyst estimates, having done so for the last four quarters by an average of 20 cents, or 30.79%.
Higher Selling Prices Drive Revenue
AK noted that its average selling price for the quarter was up 5% from last year. The higher average selling prices were a result of both higher spot and contract pricing and higher raw materials surcharges.
Analyst Estimates Are Up
Analyst earnings estimates continue to rise for AK Steel. The current-year estimate is up four cents in just the last seven days to its current projection of $4.85 per share.
Based upon this earnings projection, AK's share price looks reasonably valued, trading with a forward P/E multiple of just a bit over 14X, a slight discount to the overall market.
The Chart
As previously mentioned, shares of AK have been trading sideways in a fairly tight channel for most of the last three months. Recently, shares have rebounded from their short-term lows and a key level of support just over $60. The key to the chart is the area just above $72, the top side of the channel. Shares need to break through this area in order to once again begin an upward ascent.
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(FIX) - Comfort Systems USA - earnings soared past the year-prior four cents and jumped ahead of the consensus estimate by nearly 54%
Comfort Systems USA, Inc. (FIX) is another solid Growth and Income pick Its most recent income payout was a quarterly dividend of $0.045 per share, which equates to a yield of 1.4%. Growth is evident in the company’s first-quarter earnings per share of 20 cents, which soared past the year-prior four cents and jumped ahead of the consensus estimate by nearly 54%.
Company Description
Comfort Systems USA provides commercial and industrial heating, ventilation and air conditioning (HVAC) and building automation services. Headquartered in Houston, Texas and with more than 85 locations nationwide, the company is able to deliver high quality engineering, design, installation, energy assessment as well as repair and maintenance services across the U.S.
Income
The company’s most recent income payout was a quarterly dividend of $0.045 per share, which equates to a yield of 1.4%. This dividend was paid on June 20, 2008.
Growth
Growth is evident in the company’s first-quarter earnings per share of 20 cents, which soared past the year-prior four cents and jumped ahead of the consensus estimate by nearly 54%. Sales came in 18% higher than the previous year’s total.
The company said same store revenue grew by 13%, citing the fine execution by its team members, successful business development and diversification at many existing operations, good underlying activity levels and good weather for construction activity. Comfort Systems added that recent acquisitions also made a strong contribution. Its Atlas subsidiary, which experienced grave challenges in 2007, is on track with its recovery plan and broke even for the quarter.
Comfort Systems USA's Chairman and CEO Bill Murdy stated, "Although we are keenly aware of the economic challenges that we all face, today our business activity pipeline remains active. Our Company's culture was formed in adverse conditions, and with the growth and improvements we have worked on over the past few years we believe that we are prepared to weather any business climate. Backlog is up compared to last year, and we continue to feel very positive about our prospects for 2008."
Rising Estimates
While the Zacks Rank #1 (Strong Buy) company demonstrated strong growth so far, Wall Street also sees a promising future as indicated by upward revisions of earnings forecasts. Analyst forecasts for the full-year 2008 were lifted from the two-months ago level of $1.08 per share to $1.17.
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(RTN) - Raytheon - company’s net margin of 11.9% stands well above the industry average of 2.6%
Raytheon Co. (RTN) boasts a solid dividend, while its fundamentals reflect growth. The company recently declared a quarterly cash dividend of 28 cents per share. The dividend translates into a yield of 2%, which crushes the industry average of 0.1%. Raytheon’s first-quarter earnings of 93 cents per share increased by about 31% year-over-year.
Company Description
Raytheon Company specializes in defense, homeland security and other government markets worldwide. The company provides state-of-the-art electronics, mission systems integration and other capabilities in the areas of sensing; effects; and command, control, communications and intelligence systems, as well as a broad range of mission support services. Raytheon is headquartered in Waltham, MA and employs 72,000 people. Sales reached $21.3 billion in 2007.
Income Payments are Ahead of the Competition
The company recently declared a quarterly cash dividend of 28 cents per share. The dividend translates into a yield of 2%, which crushes the industry average of 0.1%.
The 28-cent dividend is payable on August 7, 2008 to shareholders of record as of the close of business on July 10, 2008.
More Favorable Industry Comparisons
Raytheon offers a return on equity (ROE) of 13%, topping the industry average of 10%. The company’s net margin of 11.9% stands well above the industry average of 2.6%.
Strong Growth
Raytheon’s first-quarter earnings of 93 cents per share increased by about 31% year-over-year. Sales of $5.4 billion jumped 11% from the year-prior.
Management mentioned that its strong bookings, record backlog and solid operating performance demonstrate that RTN is continuing to execute and is well positioned going forward.
Results for the second quarter are scheduled for release on July 24, 2008.
Estimates Signal More Growth
Wall Street sees more growth going forward. The consensus estimate for full-year 2008 earnings was increased to $3.92 per share from last month’s $3.90. The most accurate estimate is a more bullish $3.96.
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(MON) - Monsanto - Monsanto went ahead and raised its full-year guidance
Monsanto Company (MON) has once again showcased its financial strength and market dominance by reporting outstanding third-quarter results in which profit was up 42% from the same period last year. Based upon this stock's current price and analyst's earnings projections, shares are currently trading at a premium to the market. But when considering the company's current growth trajectory, it may be worth "paying up" for its shares.
Monsanto Company and its subsidiaries produce agricultural products for farmers primarily in the United States. The company specializes in producing seeds, specialty seeds and various herbicides. Monsanto was founded in 2000, carries a market cap. of $70.5 billion and is headquartered in St. Louis, Mo.
Impressive First-Quarter Results
Monsanto stepped up to the plate and delivered very impressive third-quarter results just two days ago, on June 25. Net sales were a record $3.6 billion, a 26% increase from the same period last year. Income for the quarter was $811 million, a 42% increase from last year. This produced earnings of $1.45 per share, safely ahead of analyst expectations of $1.35 per share.
The exceptional results have enabled Monsanto to significantly boost its cash flows at a time when cash and credit are hard to come by and many companies are struggling with liquidity issues. Free cash flows for the first 9-months of the year now stand at $675 million, compared to a use of $321 million in the first nine months of 2007.
After the very solid third-quarter results, Monsanto went ahead and raised its full-year guidance to $3.63 per share on a reported basis and $3.40 on an ongoing basis.
Valuations
Based upon this full-year earnings projection, shares of Monsanto are not exactly cheap, trading with a forward P/E multiple of 38X. But the company is in the fourth quarter of its current fiscal year, so based upon the next-year estimate, this stock does look a little more attractively priced, carrying a forward P/E multiple of 30X based upon the earnings projection of $4.24.
The Chart
Monsanto has traded mostly sideways in 2008, with shares recently giving back some of their gains. This is a very natural occurrence for a stock that has had the kind of 12-month run that Monsanto just booked. Profit taking is to be expected. As it stands, shares of MON are pressuring a key trend line that has been supporting prices for the last three months. If prices hold, look for this stock to accelerate back to its 52-week and all-time high just above $145.
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(RS) - Reliance Steel and Aluminum - carries forward P/E multiple of 11.5X, well below the average P/E of the S&P 500
Reliance Steel and Aluminum Co. (RS) raised its second-quarter guidance on June 24 by 30%, only a couple weeks before the company reports its actual earnings, scheduled for July 17. Reliance's share price has been in a bullish mood for most of the year, posting consistent gains in a challenging environment, and is currently pressuring a short-term level of resistance, looking for the breakout.
Reliance Steel and Aluminum Co. operates as a metals services center. The company provides value-added metals processing services and distributes a line of more than 100,000 metal products like steel bars and steel tubing. Reliance was founded in 1939, carries a market cap of $5.60 billion and is headquartered in Los Angeles, California.
Second-Quarter Guidance Raised
Reliance Steel shares logged a very nice rally on June 24 after the company boosted its second-quarter guidance. Reliance now expects to earn $2.00 to $2.10 per share. an increase of 30% from previous levels.
Company CEO David Hannah said the company boosted its guidance because prices for carbon steel products have increased more significantly and more rapidly than anticipated.
This comes ahead of the company's actual earnings announcement, scheduled for July 16.
First-Quarter Results
Reliace's first-quarter results, reported on Apr 16, were respectable but not overwhelming. Revenue came in at $1.91 billion, a 3.6% increase from the same period last year. Income was down slightly from last year, coming in at $107.4 million compared to $111.7 million last year. This produced earnings of $1.46 per share, outpacing analyst expectations of $1.37 per share.
Valuations
With the increased earnings guidance in hand, shares of Reliance look attractively valued compared to the overall market. Based upon the current-year estimate of $6.66 per share, this stock carries forward P/E multiple of 11.5X, well below the average P/E of the S&P 500.
The Chart
Shares of Reliance have had a great run in 2008, posting consistent gains in a very challenging environment. Recently, after the company boosted its guidance, shares once again took-off and established a new 52-week and all-time high. As it stands, this stock is pressuring a short-term level of resistance just above $78. With earnings strength and attractive valuations, this stock looks well positioned to build on its gains.
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(TLM) - Talisman Energy - Analysts estimate year-over-year earnings growth in 2008 at 127.04%
Talisman Energy is expanding exploration in Southeast Asia, the North Sea and the Middle East as crude and natural gas prices soar higher. The company has surprised on estimates two out of the last four quarters. Talisman has a forward P/E of 10.89.
Full Analysis
Talisman Energy Inc. (TLM) is an independent oil and gas company headquartered in Calgary, Canada. The company has operations in North America, the North Sea, Southeast Asia, North Africa and the Middle East. Ninety five percent of its production is in three core markets: North America, the North Sea and Southeast Asia.
The company, a Zacks #1 Rank (Strong Buy), has a strategy to grow production 5% to 10% a year. Within that framework, it recently announced new oil discoveries and an agreement to expand production in the Middle East.
On June 26, the Norwegian Petroleum Directorate announced that Talisman had drilled a small oil discovery off the coast of Norway near Talisman's existing Varg offshore field in the North Sea. The find has an estimated 630,000 to 1.5 million barrels of recoverable oil which will be developed by tapping into the Varg platform, about 550 yards away. Talisman owns 65% of the find.
Talisman to Explore in Iraq
On June 23, the company announced that two of its subsidiaries had entered into agreements with the Kurdistan Regional Government (KRG) in Iraq for interests in two blocks. Talisman will hold a 40% interest in Block K44 with WesternZagros Limited maintaining 40% and the KRG the other 20%. The company expects to spend $80 million on the block which will have three wells.
TLM also will have a seismic services agreement with the KRG on Block K39 for two years with the option of a 60% interest in one well. The company estimates exploration costs on the block will run $10-$15 million.
"We have done extensive due diligence, including careful review of legal, regulatory, security and corporate responsibility issues," said John A. Manzoni, President and Chief Executive Officer.
"Block K44 is an established Production Sharing Contract (PSC) area, entered into by the KRG prior to the effective date of the new Iraqi constitution," he said.
"The block is in the early stages of exploration with a well currently drilling. Both blocks are within the territory widely recognized as being on the KRG side of the 'Green Line' boundary that currently demarcates the region of Kurdistan within Iraq."
Earnings Rise 76% in the First Quarter Compared to 2007
On Apr 30, Talisman Energy reported first quarter earnings and missed on Wall Street estimates by 8.16%, or 4 cents per share. Net income was $466 million, down from $520 million in the first-quarter 2007 mainly due to a $277 million gain on asset sales in the prior year.
Earnings rose 76% to $476 million from $270 million in the year-ago period. The company said the earnings increase was the result of higher prices, lower DD&A and dry hole costs.
Talisman's Production Outlook
On May 20, the company released its production outlook for the next several years. Over the next 18 months, TLM expects production to grow at an annual rate of between 5-8% with a majority of the growth coming from projects in Norway and Southeast Asia. From 2009 through 2012, the company expects production to increase 5-10% annually.
Talisman expects Southeast Asia to play a big role in the company's portfolio. TLM doubled its production in the region over the past five years and sees the possibility of doubling it again in the next five years. The company has made recent oil discoveries in Vietnam and sees potential in offshore acreage in Indonesia.
Estimates Rise for the Second Quarter and the Full Year
With crude and natural gas prices hitting records, covering analysts have been raising estimates for the last three months. For the second quarter, consensus estimates rose 81% to 67 cents from 37 cents per share in the last 90 days.
For the full year, consensus estimates jumped 77% for the year in the last three months to $2.11 from $1.19 per share. Analysts estimate year-over-year earnings growth in 2008 at 127.04%.
Talisman's forward P/E is 10.89. Its price-to-book is 2.97. The company has an outstanding five year average return on equity of 19.74%. As an added bonus, TLM pays a dividend, with the current yield at 0.90%.
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(TBSI) - TBS Intl - Full year estimates are up 23% in the last two months
TBS International posted record revenue and earnings in the first quarter as shipping of commodities remained strong worldwide. The company has surprised on estimates each of the last four quarters by 22.63%. TBS's forward P/E is only 5.97.
Full Analysis
TBS International Limited (TBSI) is an ocean transportation company that ships cargo worldwide on 45 vessels.
The company ships through liner, parcel, bulk and vessel chartering services on key trade routes between Latin America and China, Japan and South Korea and ports in North America, Africa, the Caribbean and the Mediterranean.
TBS, a Zacks #1 Rank (Strong Buy), has developed a niche in multipurpose tweendeckers and smaller dry bulk carriers varying from 17,300 dwt to 45,500 dwt that can service ports that larger ships cannot. The company ships steel products, metals, fertilizer, coal, salt, sugar, grain, chemicals and other industrial goods.
TBS is heavily concentrated in Latin America and offers a high-frequency of sailings from Chile, Ecuador and Peru to China, Japan and South Korea. The Latin America route serves industrial cargo customers in Brazil, Argentina and Venezuela with scheduled transports to the Caribbean, and the various coasts of Central and South America.
The company operates time charter services, which includes both short- and long-term time charters.
On June 23, the company announced the acquisition of a 1992 built handymax bulk carrier for the price of $44 million. The vessel is charter free and delivery is expected in the third quarter of 2008. The company's fleet will total 46 vessels after the purchase is completed.
TBS Reports Record Revenue and Earnings Per Share in the First Quarter
On May 8, TBS reported record first quarter earnings that beat Wall Street estimates by 36%, or 51 cents per share. Net income increased 215.3% to $45.4 million, or $1.62 per share, from $14.4 million, or 51 cents per share, in the first quarter 2007. Analysts expected $1.19 per share.
Revenues increased 87.2% to $131.6 million, from $70.3 million in 2007, including voyage revenues of $98.2 million, time charter revenues of $32.7 million and other revenues of $0.7 million. During the first quarter of 2008, TBS operated 37 vessels compared to 32 vessels in the year-ago period.
The company is bullish about the rest of 2008, as it sees increased cargo volumes, has a larger fleet and sees improved freight rates. TBS anticipates the expansion of global trade, particularly in logistic and project businesses relating to the steel, mining, energy and construction industries.
Consensus Estimates Rise for the Second Quarter and the Full Year
In response to the bullish first quarter earnings report, consensus estimates on the second quarter and the full year have been rising. In the last 60 days, second quarter estimates rose 17 cents to $1.47 from $1.30 per share.
Full year estimates are up 23% in the last two months to $6.37 from $5.02 per share.
TBS International's forward P/E is only 5.97, under the industry average of 14.71. Its price-to-book is 2.98. The company had a return on equity (ROE) in 2007 of 30.70%.
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