Stoneridge Inc. (SRI) is looking for its 2010 momentum to continue through 2011. The company was last featured as a Zacks Rank Buy in September, but just released an earning surprise last week.
Analysts have been slow to react to the recent news, so it is not too late to get into this Zacks #2 Rank (Buy).
Company Description
Stoneridge makes engineered electrical components for the automotive, agriculture and off-highway vehicle industries. The company is headquartered in Ohio and has a market cap of roughly $250 million.
Top Swells
On Feb 4 Stoneridge reported fourth-quarter and year-end results. For the quarter, net sales jumped 20% to $161 million. The company said a combination of higher demand and organic growth both led to the increase.
As for the bottom line, net income came in at $4.4 million, up nicely from a $0.2 million loss a year ago. Strip out a $1.3 million one-time charge and EPS comes out to 23 cents, which is well ahead of the 14 cents analysts were expecting.
Optimistic Outlook
Management said that it expects the current sales trend to continue, projecting annual sales growth of 13-18% in 2011. Only 1 of the 3 covering analysts has submitted an updated estimate, but the revision was enough to move the consensus higher.
The Zacks Consensus Estimates for 2011 jumped a nickel, to $1.31. Next year it is up 6 cents to $1.84. For now the projected growth rates are 176% and 40%, respectively, but that should change once the other 2 analysts update their projections.
Priced to Move
Shares of SRI are trading with a price to sales of just 0.61 times, which is well ahead the mean for its peer group. The P/E is just 11.5 times this year’s estimates and 8.2 times the 2012 forecast.
The Chart
Some of that value has to do with the lack of movement on the earnings report. Shares tried to surge higher but there was enough selling on the news to keep shares at a modest gain. However, this creates a great entry point and the MACD is showing that momentum is starting to shift to the upside.
Read the September 22nd Feature Here
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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STONERIDGE INC (SRI): Free Stock Analysis Report
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