Universal Stainless & Alloy Products, Inc. (USAP) continues to beat expectations, posting its latest earnings surprise in late April. Estimates are moving higher, which is nothing new, pushing shares to a Zacks #1 Rank (Strong Buy)
Company Description
Universal makes semi-finished and finished steels. The company’s products are used in heavy equipment manufacturing, petrochemical, and other industries.
Top Line Swells 72%
On Apr 27 Universal reported first quarter results that impressed Wall Street. Sales were $59.8 million, up 72% on a year over year basis and a 16% increase sequentially.
Net income more than tripled to $4.4 million, or $0.68 per share. That was more than a 25% increase sequentially and came in a dime higher than expected. Universal has now beaten estimates for 6 quarters in a row.
Comments from the company were bullish and included words like “Robust business activity” and “increasing confidence”, so it is no wonder analysts were pleased with the earnings release.
Estimates Rise
The Zacks Consensus Estimate for this year popped 22 cents, to $2.72 on the news. Next year’s forecasts rose aggressively, up 64 cents to $3.54.
Last year Universal made $1.93 per share, so the projected growth rates are now 41% and 30%, respectively. Right now shares are trading at just 13 times this year’s estimate, which is ahead of the industry average.
The Chart
The long-term earnings trend is tracking the economic recovery. Estimates started moving higher a few years ago and had kept going at a pretty good pace. So, if you believe in the ongoing recovery, this industrial stock would be a good fit for you.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service
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