Kinetic Concepts, Inc. (KCI) has posted big gains in 2011, currently trading near its 52-week high after reporting its fourth consecutive earnings surprise. With rising estimates and a bullish growth projection, this Zacks #1 rank stock offers plenty of momentum.
Company Description
Kinetic Concepts is a medical technology company that specializes in the discovery and development of therapies and products for wound care and tissue regeneration worldwide. The company was founded in 1976 and has a market cap of $3.95 billion.
Kinetics has been slowly grinding higher for most of 2011, recently hitting a new multi-year high after reporting strong Q1 results in late APril that came in well ahead of expectations.
First-Quarter Results
Revenue for the period was up 3% from last year to $501 million. Earnings also looked good, coming in at $1.11, 9% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 6% over the last four quarters.
The company saw its gains from its smaller divisions, with APAC AHS revenue up 83% from last year to $13.7 million. Its worldwide LifeCell revenue was up 18% to $79 million.
Financial Profile
The company also continues to insulate its balance sheet, with cash and short-term investments up $186 million from last year to $442 million. Its total debt fell $110 million from last year to $1.12 billion.
Estimates
We saw some decent movement in estimates off the good quarter, with the current year up 39 cents to $5.04. The next-year estimate is pegged at $5.47, a bullish 8.5% growth projection.
But in spite of the gains, KCI still have value, trading with a forward P/E of 11X, a steep discount to its peer average of 19.5X.
12-Month Chart
On the chart, KCI has been strong for most of 2011, with shares lingering in elevated territory after hitting a new multi-year high in late May. The stochastic below the chart is signaling that shares are close to being over sold, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
KINETIC CONCPTS (KCI): Free Stock Analysis Report
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