China Green Agriculture, Inc. (CGA) is once again pressuring its 52-week high after jumping higher on a recent third-quarter earnings surprise.
Company Description
China Green Agriculture, Inc., through its subsidiaries, develops and manufactures specialty fertilizers in China. The company also produces agricultural products like fruits, vegetables and flowers. China Green was founded in 200 and has a market cap of $297 million.
Chinese stocks are hot, and CGA is no exception, with the company’s strong third-quarter results, reported on Nov. 11 helping to push shares back within striking distance of the 52-week high.
Third-Quarter Results
Sales were up 27% from last year to $11.3 million. EPS also came in strong at 24 cents per share, 4 cents ahead of the Zacks Consensus Estimate. The company has beat in each of the last four quarters by an average of 4 cents, or 26%.
The company’s largest segment, Jinong, which sells fertilizer compounds and accounts for 90% of revenue, noted its top three sellers accounted for 16% of total sales, displaying solid revenue diversity. The group’s sales were up 33.5% from last year, driven by increased production capacity and sales of its higher-end products.
Margins Expansion and a Strong Balance Sheet
Gross margin also expanded nicely, increasing to 62% from 56% last year. The company’s cash position jumped $17.4 million to $35 million. Short-term loans totaled $2.2 million, against equity of $85.5 million. The company has no long-term debt.
Estimates Jump
After word of the good quarter estimates moved higher. The current-year estimate added 6 cents and now stands at 91 cents. The next-year estimate is pegged at $1.36, a bullish 49% growth projection.
Shares of CGA are trading have some value too, trading with a forward P/E of 14X, a discount to the overall market.
The Chart
Shares of CGA are up big since taking flight in early April, hitting a new 52-week high at $15 in August. Since then shares have traded mostly sideways but continue to pressure to the top end of the recent range, take a look below.
