A region with a booming population will need plenty of infrastructure projects. Hollysys Automation Technologies, Ltd. (HOLI) is one company set to profit from them.
Company Description
Hollysys makes automation and control technologies for several industries in China and other parts of Asia. Customers are in the industrial, railway, and nuclear industries.
A Stellar Quarter
On Nov 14 Hollysys reported fiscal first-quarter results that the company described as “stellar”. Revenues jumped more than 43%, to $87.2 million.
That led to a 24% improvement in net income, which was $12.3 million. Earnings broke down to $0.23 per share, 2 cents higher than the Zacks Consensus Estimate.
Additionally, Hollysys wrapped up a $7.5 million share buyback program, netting 1.26 million shares off of the open market.
Estimates Move Higher
After the earnings surprise, analysts raised their outlook for both this year and fiscal 2013. The average estimate is up 4 cents, to $0.94 for this year.
Analysts polled by Zacks are expecting $1.02 on average for next year, up 8 cents on the earnings report.
HOLI is trading at just under 10 times forward estimates, which puts the PEG ratio at 1.1. The price to sales and price to book are near 1.8 times.
The Chart
Volume has been light this fall for HOLI, but the trend is still bullish. We could see some resistance here, especially with a hesitant market, but the earnings multiples mean there could be more upside for this Zacks #1 Rank (Strong Buy).
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
