International Rectifier Corp (IRF) continues to see strong growth in several key industries. After its latest earnings surprise, estimates soared pushing growth rates sky-high.
This Zacks #1 Rank (Strong Buy) is trading around 15 times forward estimates, so you don’t have to worry about overpaying either.
Company Description
International Rectifier Corp makes analog, digital and other power management products. Manufacturers used the items in computers, appliances, lighting, autos, satellites, aircraft and defense systems.
Revenue Surges 57%
On Nov 4 International Rectifier Corp announced first-quarter results for fiscal 2011 that showed revenue up 57% on a year over year basis. The top line came in at $281 million, which is also up 7% on a sequential basis.
Earnings per share came in at 42 cents, which was 6 cents ahead of the Zacks Consensus Estimate. In same period last year the company posted at loss of 23 cents per share.
Forecasts Jump
While International Rectifier Corp did acknowledge cyclical weakness in consumer and computing markets, the company still sees strength in several other areas.
Over the past 60 days the full-year consensus for fiscal 2011 is up 35 cents, to $1.73. Next year’s forecasts average $1.98, which is up 36 cents. Growth rates are exponential given the 26 cents earned in 2010.
S&P Ups Rating
The S&P recognized International Rectifier Corp’s improving conditions and raised its credit rating. While the mark is still in the “junk” category, it is up to BB-, from B+ and is just a few ticks below investment grade.
The Chart
Shares of IRF have been on fire since the earnings release and subsequent upward revisions. But shares are still showing solid valuations. It is tough to get a good peer group evaluation, but 15 times forward estimates is not bad.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
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