Ituran (ITRN) is a Zacks #1 Rank (Strong Buy) due to its solid history of positive earnings surprises.
Company Description
Ituran provides location-based services and wireless communications products in Israel, Brazil, Argentina, and the United States. It offers stolen vehicle recovery services, including locating, tracking, and recovering stolen vehicles and fleet management services which enable corporate customers to track and manage vehicles in real time.
Six Straight Earnings Surprises
ITRN has produced a solid history of six straight positive earnings surprises. While none of the beats are more than $0.04, the smallest beat was the most recent of $0.01 or 3.5%. The other smallest percentage beat is the 6.9% beat for the June 2011 quarter when the company reported earnings $0.02 ahead of the Zacks Consensus Estimate.
Two earnings beats were double digit beats, in terms of percentage ahead of the Zacks Consensus Estimate. The March 2011 earnings of $0.31 was $0.03 ahead of the estimate or a beat of roughly 11%. The September 2011 quarter saw earnings of $0.32, $0.04 or 14% above the Zacks Consensus Estimate.
ITRN Recent Earnings
On February 22, 2012 the company reported earnings of $0.29 per share and sales of $37 million. In the year ago period, the company reported $0.28 per share and $41 million in revenue.
ITRN trades at a discount when compared to industry average PE’s, but a premium to other metrics. The premium for forward earnings of 10.5x is a small discount to the 10.9x industry average. The twelve month trailing PE of 11x for ITRN hold a bigger discount to the industry average of 20x. In terms of price to book, the 3x multiple is a premium to the 2.3x industry average. The price to sales metric also carries a premium to the industry average.
The Chart
The price and consensus chart tells us that investors are closely following the earnings estimate expectations for ITRN. The stock does appear to have been trading above expectations in late 2010, but has since returned to more palatable levels. When the stock is well below where the future earnings estimates lines are, we view that as a sign of being undervalued. ITRN is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
