Yesterday, National Technical Systems’ stock closed at $8.19, and through a 3.14% increase recorded another yearly highest value for the third time this month. Investor demand was considerable: more than 130,000 shares were traded, which is two and a half times the average trading volume for the stock. This sound like a good starting point for today’s announced transfer of all Sunnyvale operations to a new testing laboratory in Fremont, CA.
Since the beginning of June, the stock price is moving surely and stably up. Around two weeks ago, a contract with Boeing has been announced, under which NTSC would provide support for the 777 Program. Though still not officially confirmed and whether the market relied on that news or not, the new yearly highs and the large demand came in the following week.
Further, NTSC promised in the middle of June a cash dividend of $0.07 for each share of common stock. It was supposed to be paid yesterday to shareholders of record on July 6, which explains the several downward corrections around that time. Though, the general signal has been positive and the stock continued its flight.
Though, NTSC cash position does not really suggest a reason for sharing part of the earnings, revealing thus that no future investments are planned. The Unitek Technical Services acquisition from last November has already contributed to the revenues, which grew up by nearly 30% on an yearly basis in the three months ended this April.
The company managed to keep the costs down despite the larger capacity and the gross margin was also considerably higher. However, the magnificent 557% growth in the net income was not due solely to operational growth, but to the largest extend to the proceeds from the sale of NTSC Virginia facility at the end of April, which will hopefully not recur as management believes the company is now well positioned and anticipates increased demand for engineering services, especially from the aerospace industry.
