Promising Fourth Quarter Prelim Results

On Jan 16, 2013, Nautilus announced preliminary fourth-quarter net sales of approximately $65.0 million, up 8.4% year over year. As a result, earnings per share are expected between 21 cents and 23 cents, versus 11 cents a year ago.

For the full-year 2012, preliminary net sales grew 7.5% to $194.0 million, while earnings per share are anticipated between 32 cents and 34 cents, substantially up from 8 cents in the prior year.

Solid Third Quarter Beat

Nautilus’ third-quarter adjusted earnings of 4 cents per share breezed past the Zacks Consensus Estimate by 500.0% and the year-ago results by 300.0%. The company’s net sales inched up 1.7% to $38.1 million. In particular, the Direct segment experienced solid revenue growth of 10.9%, thanks to increased demand for Nautilus’s cardio products.

Gross margin in the quarter improved 650 basis points to 48.7%, buoyed by sales of higher margin Direct Channel products. Operating margin also improved 370 basis points to 1.8%, driven by efficient management of overheads.

Earnings Estimates Moving Up

The Zacks Consensus Estimate for 2012 has gained approximately 18.0% in the past 60 days to 33 cents, representing a year-over-year increase of 312.5%. Meanwhile, the Zacks Consensus Estimate for 2013 moved up 10.5% to 42 cents, indicating a year-over-year improvement of 26.3%.

Valuation Stretched, Yet Lucrative

Though the stock of Nautilus is expensive by some valuation metrics like price to book value (P/B) and price to sales (P/S) compared to its peers, it looks attractive on a price/earnings (P/E) ratio and return on equity (ROE) basis.

The stock’s P/B basis is at 4.55x and its P/S is at 0.86x. Both figures are at a premium to the peer group averages. Given the company’s compelling fundamentals, the premium valuation is justified.

However, Nautilus currently trades at a forward P/E ratio of 12.65x, in line with the peer group average. Moreover, it has a trailing 12-month ROE of 19.5%, which is significantly above the peer group average of (0.4%), suggesting efficient reinvestment of earnings compared to its peer group.

Shares of Nautilus have been rising since late-October 2012 and reached a new 52-week high of $5.43 on Jan 23, 2013. The stock is currently trading above its 50- and 200-day moving averages, which stand at $3.68 and $3.03, respectively.

Volume averages roughly 224K daily. The 52-week return for the stock is 170.26%, significantly ahead of the 13.5% return by the S&P 500 index.

With a brand portfolio that includes Nautilus, Bowflex, SchwinnFitness, StairMaster and Trimline, Nautilus manufactures and markets a complete line of health and fitness products through direct, commercial and retail channels primarily in the United States and Canada. The company is headquartered in Vancouver and Washington.

The market cap of the company is $161.3 million. Another stock from the same sector expected to perform strongly includes HSN Inc. (HSNI). Some other stocks from leisure and recreational products with a short-term bullish outlook are Sturm, Ruger & Co. Inc. (RGR) and Smith & Wesson Holding Corporation (SWHC). All three companies carry a Zacks Rank #1 (Strong Buy).

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Zacks Investment Research ]]> Thu, 24 Jan 2013 11:00:01 GMT Gibraltar Industries, Inc. (ROCK) have trended higher since this building products company expanded its portfolio with three acquisitions in three key U.S. markets. The company also released encouraging preliminary numbers for the upcoming quarter, which will be announced in late February.

With a recovering housing market, strong product portfolio, expansion opportunities and a bright outlook, this Zacks Rank #1 (Strong Buy) stock offers an attractive investment opportunity.

Acquisition Update and Favorable Preliminary Results

On Jan 15, Gibraltar Industries announced that it boosted its portfolio and expanded its customer base with the acquisition of assets from three businesses. The acquisitions were made between Nov 14 and Dec 28, 2012. They have strengthened ROCK’s position in three key U.S. markets, namely (1) sun protection products for new residential construction and home remodeling; (2) function-critical components for public infrastructure construction and maintenance; and (3) perforated metal products for industrial and automotive applications.

Following the acquisitions, Gibraltar Industries is now confident of reporting strong fourth quarter results, scheduled for Feb 22, 2013. The company expects adjusted earnings per share between 1 cent and 5 cents, compared to the prior-year loss of 17 cents. Sales are expected between $171 million and $173 million, compared with $174 million in the fourth quarter of 2011. The company expects adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) in the range of $13 million to $14 million, versus $3 million in the prior-year quarter.

Adjusted earnings are expected between 62 cents and 66 cents for 2012, significantly higher than the 50 cents reported in the prior-year. The company projects sales of $788 million to $790 million, up approximately 3% from 2011. Adjusted EBITDA for the year is expected at $78 million to $80 million, a 3% to 5% increase.

The Zacks Consensus Estimate for the fourth quarter stands at 3 cents per share, up 114.7% from the prior year quarter. For 2012, the Zacks Consensus Estimate is 63 cents per share, up 35.1%.

Surge in Earnings Estimates

Over the past 60 days, the Zacks Consensus Estimate for 2012 has gone up 8.6% to 63 cents per share, reflecting year-over-year growth of 35.1%. The Zacks Consensus Estimate for 2013 is up 12.2% to 92 cents per share over the same timeframe, suggesting year-over-year growth of 44.1%.

Valuation

Gibraltar Industries currently trades at a forward price to earnings (P/E) ratio of 18.7, reflecting a premium of 43.9% to the peer group average of 13.0. Similarly, it currently trades at a price-to-sales (P/S) multiple of 0.66, reflecting a 73.7% premium to the peer group average of 0.38. However, given the company's compelling fundamentals, the premium is justified. The P/B multiple for both the stock and the peer group average stands at 1.1.

Shares of Gibraltar Industries have been rising sharply since mid-Nov 2012, following its strong third quarter results and the acquisitions. The stock is currently trading above its 50- and 200-day moving averages, which stand at $14.63 and $12.35, respectively. In fact, the stock has consistently traded above its 50- and 200-day moving averages since late-November. Volume averages roughly 92K daily.

Based in Buffalo, New York, Gibraltar Industries, Inc. is a manufacturer, processor and distributor of residential and commercial building products and processed metal products for the building and construction, industrial, and automotive markets. The company serves customers across North America and Europe. The market cap of the company is $518.1 million.

Other stocks in the basic material sector worth considering are Posco (PKX) with a Zacks Rank #1 (Strong Buy) and Commercial Metals Co. (CMC) with a Zacks Rank #2 (Buy).

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Zacks Investment Research ]]> Wed, 23 Jan 2013 11:00:01 GMT Mobile Mini, Inc. (MINI) have been moving forward for a while and hit a 52-week high on Jan 18. This Zacks Rank #1 (Strong Buy) provider of portable storage solutions delivered a 31.82% earnings surprise in its third quarter.

There are several reasons why MINI could be attractive to growth investors, including its expected long-term earnings growth of 14%, its strong market leadership position, geographic expansion opportunities and its focus on the core portable storage leasing business with predictable recurring revenue and high margins.

A Solid Q3

On Nov 7, Mobile Mini reported third-quarter 2012 earnings of 29 cents per share, marking a 38% increase from last year and a 31.8% surprise above the Zacks Consensus Estimate. In terms of the third quarter earnings growth and surprise, Mobile Mini outshone its peers Crown Holdings Inc. (CCK), Silgan Holdings Inc. (SLGN) and Ball Corporation (BLL).

Revenues rose 6% year over year to $100.9 million, ahead of the Zacks Consensus Estimate of $98 million. Leasing revenues (90% of total revenues) increased 9.7% to $90.7 million, which was the highest level since the fourth quarter of 2008 and the seventh consecutive quarter with increased leasing revenues.

On the profitability front, adjusted operating profit increased 12% to $29 million with operating margin expanding 150 basis points to 28.9%. Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) was $38.1 million, up 8.8% from the year ago quarter. Aided by operating leverage, adjusted EBITDA margin increased to 37.8% from 36.8% in the year ago quarter, improving for the first time since 2009.

Mobile Mini recently announced the exit of CEO Steven Bunger, and said that the search is on for a fitting successor.

Earnings Estimates on the Rise

The Zacks Consensus Estimate for 2012 has moved up roughly 11% in the last 90 days to 89 cents per share, representing a year-over-year growth of around 16.67%. For 2013, the Zacks Consensus Estimate rose roughly 5% over the same period to $1.17 per share, indicating an estimated growth of 31.58%.

Valuation: Stretched but Justified

Mobile Mini is currently trading at a forward P/E of 19.73x, a 42% premium to the peer group average of 13.85x. Its trailing twelve months P/E of 27.73x is above the peer group average of 16.09x. The price-to-sales of 2.78x is well above the peer group average of 0.83x. The premium valuation is justified given the strong earnings trajectory.

Mobile Mini is currently trading above its 50- and 200-day moving averages, which stand at $20.72 and $17.30, respectively. Notably, following a golden crossover in mid-Nov 2012, the 50-day moving average continues to read higher than the 200-day moving average, manifesting the bullish trend.

Mobile Mini, which has a market cap of roughly $1.03 billion, is a leading provider of portable storage solutions. The company derives the major portion of its revenues from the leasing of portable storage containers, security office units and mobile office units. The company boasts a total lease fleet of approximately 235,000 units with 136 locations encompassing the U.S., United Kingdom, Canada and The Netherlands. The company offers its customers an array of portable storage and office products in varying lengths and widths with differentiated features such as patented locking systems, premium doors, electrical wiring and shelving.

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Zacks Investment Research ]]> Tue, 22 Jan 2013 11:00:01 GMT American Vanguard Corp. (AVD) saw its share price catapult roughly 124% in 2012, as this maker of diversified specialty chemicals is seeing strong demand for soil insecticides. Furthermore, the Zacks Rank #1 (Strong Buy) stock has put together five positive earnings surprises in the past six quarters.

With a series of earnings beats, an above-average projection for long-term earnings growth of 24% and favorable industry trends, AVD appears to fit the bill for aggressive growth investors.

Strong Beat in Q3

On November 1, American Vanguard posted a solid jump in its third-quarter 2012 profit, riding on strong market demand for its products. Earnings of 28 cents per share topped the Zacks Consensus Estimate by nearly 22% and surpassed last year’s performance by as much as 75%.

Revenues soared 23% year over year to $90.8 million, comfortably beating the Zacks Consensus Estimate of $83 million. Gross margin rose to 43.7% from 41.4% a year ago, aided by better mix, higher pricing and manufacturing efficiency.

American Vanguard said results in the upcoming reporting periods will be supported by the successful roll out of its herbicide co-marketing program with Monsanto (MON). The company also noted that its crop protection products will aid sales growth and profitability.

American Vanguard is expected to report its fourth quarter results on March 4. The Zacks Consensus Estimate is currently at 35 cents per share.

Rising Earnings Estimates

The Zacks Consensus Estimate for 2012 has moved up roughly 5% in the last 90 days to $1.22 per share, representing year-over-year growth of around 52.5%. For 2013, the Zacks Consensus Estimate rose roughly 7% over the same period to $1.57 per share, indicating an estimated growth of 28.69%.

Valuation Warranted

American Vanguard is currently trading at a forward P/E of 20.15x, on par with the peer group average. The price-to-book of 4.10x is, however, higher than the peer group average of 2.02x. Moreover, the price-to-sales of 2.55x is well above the peer group average of 0.65x. The healthy earnings trajectory should lend support to valuation.

Sound Technicals

American Vanguard has been trading above the 200-day moving average since November 2011. Interestingly, the 50-day moving average continues to read higher than the 200-day moving average, manifesting the bullish trend with the 200-day moving average acting as the support level.

American Vanguard Corp. makes specialty chemical products for agricultural and commercial applications. The company develops and markets an array of chemicals, including insecticides, fungicides and herbicides, for crops, human and animal health protection. American Vanguard, which has a market cap of roughly $888 million, has the largest assortment of corn soil insecticides coupled with the most advanced dispensing equipment.

Other specialty chemical companies with favorable Zacks Ranks are: American Pacific Corp. (APFC), with a Zacks Rank #1 (Strong Buy) and Georgia Gulf Corp. (GGC) with Zacks Rank #2 (Buy).

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Zacks Investment Research ]]> Mon, 21 Jan 2013 11:00:01 GMT Abercrombie & Fitch Co. (ANF) has outperformed the Zacks Consensus Estimate for the last 3 quarters, delivering an average beat of 36.4%. Most recently, it topped by 47.5% in its fiscal third quarter and raised its earnings guidance for 2012, sending shares higher for this casual apparel retailer.

This Zacks Rank #1 (Strong Buy) stock is an attractive investment pick given its expected earnings growth of 28.1% in fiscal 2012 and projected long-term earnings growth of 18.9%.

Third Quarter Beat

On Nov 14, Abercrombie & Fitch reported fiscal third quarter earnings of 87 cents per share, rising more than 52% year over year and significantly beating the Zacks Consensus Estimate of 59 cents. The robust quarterly performance was primarily driven by strong top-line growth along with improved margins and a lower effective tax rate.

Driven by robust sales performances in the international market, total sales advanced 9% to $1.170 billion from $1.076 billion last year. Moreover, Abercrombie’s quarterly revenue surpassed the Zacks Consensus Estimate of $1.115 billion.

Based on the strong quarterly performance, Abercrombie raised its earnings guidance for fiscal 2012 to between $2.85 and $3.00 per share, compared to its earlier guidance range of $2.50 to $2.75.

Earnings Estimates Climb

Over the past 30 days, the Zacks Consensus Estimate for fiscal 2012 rose 0.3% to $2.96 per share, representing year-over-year growth of 28.1%. The Zacks Consensus Estimate for fiscal 2013 advanced 0.6% to $3.58 over the same time frame, reflecting a year-over-year increase of 21.1%.

Valuation

Abercrombie & Fitch currently trades at a forward P/E of 16.9x, reflecting a 15% premium to the peer group average of 14.7x. On a price-to-book basis, shares are trading on par with the peer group at 2.5x.

However, given the company’s compelling fundamentals, the premium is justified and well supported by its long-term estimated EPS growth rate of 18.9%.

Shares have been steadily growing since mid-November, reflecting an upside of about 61.5%. Abercrombie & Fitch has consistently traded above its 200-day and 50-day moving average since Nov 13, 2012. Volume averages roughly 3,202K daily.

Founded in 1892 and based in New Albany, Ohio, Abercrombie & Fitch Co. operates as a specialty retailer of premium, high-quality casual apparels for men, women, and kids through a network of over 1,050 stores across the U.S., Europe, Canada, and Asia. The company operates through Abercrombie & Fitch, abercrombie kids, Hollister and Gilly Hicks across the United States and Internationally. The company reports its operating results under three segments: U.S. Stores, International Stores and Direct-to-Consumer. Abercrombie & Fitch has a market cap of $4.01 billion.

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Zacks Investment Research ]]> Fri, 18 Jan 2013 11:00:01 GMT Melco Crown Entertainment Limited (MPEL). This developer and owner of casino gaming and entertainment resorts hit a 52-week high on Jan 15, shortly after a report that Macau’s gaming revenue grew 13.5% in 2012. Melco Crown Entertainment primarily operates in this region.

Earnings estimates for this Zacks Rank #1 (Strong Buy) have been on the rise since the announcement and since its solid third quarter results. The stock also carries an attractive long-term earnings growth rate of 28.7% and a PEG ratio of 0.78x.

Macau Gaming Revenues Continue to Rise

Amid concerns of a Chinese slowdown, Macau's gaming revenue grew 13.5% year over year to $38.0 billion in 2012, as reported by Macau's Gaming Inspection and Coordination Bureau in early January.

As per the Bureau, December gambling revenue in Macau touched a new high with an increase of 20% to $3.5 billion, beating the previous record set in October. The actual figures surpassed both Bureau and analyst expectations.

This growth momentum is expected to continue in the near term, thanks to a growing Chinese middle class population. Melco Crown Entertainment, being a Macau-focused casino operator, is most likely to benefit from the opportunity.

Solid Third Quarter Beat

In November, Melco Crown Entertainment’s third-quarter earnings of 20 cents per share beat the Zacks Consensus Estimate by 42.9%, while its net sales of $1,010.8 surpassed the Zacks Consensus Estimate by 2.8%. In particular, mass market segments at City of Dreams experienced strong revenue growth.

Earnings Estimates Moving Up

The Zacks Consensus Estimate for 2012 has risen 1.4% to 74 cents per share over the last 30 days, representing a year-over-year increase of 23.6%. For 2013, the Zacks Consensus Estimate has advanced 8.8% to 87 cents as 6 of 12 estimates were revised higher, suggesting a year-over-year improvement of 17.6%.

Attractive Valuation

Melco Crown Entertainment currently trades at a forward price/earnings (P/E) ratio of 22.3x and has a price to sales (P/S) multiple of 2.7x, which are both at a premium to the peer group averages.

However, the valuation is attractive on a price to book (P/B), price/earnings to growth (PEG) and return on equity (ROE) basis. The stock currently trades at a forward P/B of 3.11x, a 3.7% discount to the peer group average.

The PEG ratio comes in at 0.78x, a 31.6% discount to the peer group average of 1.14x. Moreover, it has a trailing 12-month ROE of 12.9%, which is slightly above its peer group average of 12.4%, suggesting efficient reinvestment of earnings compared to its peer group.

Shares of Melco Crown have been rising since late-December 2012 and reached a new 52-week high of $20.02 on Jan 15, 2013. The stock is currently trading above its 50- and 200-day moving averages, which stand at $16.12 and $13.38, respectively.

Volume averages roughly 4799K daily. The 52-week return for the stock is 83.1%, compared to 13.8% for the S&P 500 index.

Based in Macau, Melco Crown Entertainment Limited owns and develops casino gaming and entertainment resort facilities. It owns and operates the City of Dreams, Altira Macau and Mocha Clubs.

The market cap of the company is $10.7 billion. Some other stocks from the same sector expected to perform strongly include Ameristar Casinos Inc. (ASCA), Full House Resorts Inc. (FLL) and International Game Technology (IGT). All three companies carry a Zacks Rank #2 (Buy).

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Zacks Investment Research ]]> Thu, 17 Jan 2013 11:00:01 GMT Financial Engines, Inc. (FNGN) has delivered two straight quarters with positive earnings surprises, putting together an average beat of 19.6%. This Zacks Rank #1 (Strong Buy) investment advisor offers an attractive opportunity for investors given its expected earnings growth of 38.3% in 2013 and projected long-term earnings growth of 32.5%.

Rank Drivers

Financial Engines will report fourth-quarter results on February 18. The Zacks Consensus Estimate for the quarter is 13 cents on revenues of $52 million. In the year-ago quarter, it reported 12 cents.

On November 6, Financial Engines reported third quarter net income of 10 cents per share, nearly 25% above the Zacks Consensus Estimate and 43% higher than the year-ago earnings.

Revenue jumped 36% year over year to $48.4 million, driven by a 50% surge in professional management revenue.

The company expects to generate 2012 revenues between $185 million and $187 million. The Zacks Consensus Estimate of $186 million is at the midpoint of the company guidance.

Earnings Estimates

The Zacks Consensus Estimate for 2013 is currently pegged at 51 cents, suggesting a year-over-year increase of 38.3%.

Valuation

Shares of Financial Engines are roughly trading at 55.9x on a price-to-earnings basis (P/E), compared with the peer group average of 19.9x. On a price-to-book (P/B) basis, shares are trading at 5.3x, compared with the peer group average of 1.6x.

Financial Engines has a trailing 12-month ROE of 7.6%, lower than the peer group average of 11.1%.

Headquartered in Palo Alto, California, and founded in 1996, Financial Engines Inc. is a leading investment advisor. It provides portfolio management, investment advice and retirement income services to participants in employer-sponsored defined contribution retirement plans, such as 401(k) plans. Its target retirement plan market includes plan participants, plan sponsors and plan providers. Having a market capitalization of $1.35 billion, it competes with Ameriprise Financial Inc. (AMP) among others.

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Zacks Investment Research ]]> Wed, 16 Jan 2013 11:00:01 GMT Michael Kors Holdings, Ltd. (KORS) reported its fourth straight quarter with a positive earnings surprise in mid November, as fiscal second-quarter EPS surpassed the Zacks Consensus Estimate by 22.5%. With strong brand portfolio, an innovative fashion design and a potential long term growth rate of 31.4%, this Zacks Rank #1 (Strong Buy) global luxury lifestyle brand offers an attractive investment opportunity.

Fiscal Q2 Earnings Soar

On November 13, Michael Kors reported fiscal second-quarter earnings per share of 49 cents, which soared 96% year over year and topped the Zacks Consensus Estimate at 40 cents.

Total revenue surged 74% from last year to $532.9 million, surpassing the Zacks Consensus Estimate of $520 million. Sturdy sales growth in each of the company's business segments and across all geographies drove the upside.

Sales at the retail segment grew 82% on the back of a 45.1% rise in comparable store sales and the opening of 66 new stores. Net sales at the wholesale and licensing segments grew 75% and 13%, respectively.

Gross profit was up 80% to $315.9 million, while gross margin expanded 200 basis points to 59.3%. Operating income totaled $157.9 million, significantly up from $70.0 million in the year-ago quarter, with operating margin rising 670 basis points to 29.6%.

Michael Kors projects earnings for the fiscal third quarter between 37 cents and 39 cents per share with sales of $525 million to $535 million. Comparable store sales are expected to rise by mid-20%. For fiscal 2013, the company expects earnings between $1.48 and $1.50 per share on net sales of about $1.86 billion to $1.96 billion, based on a rise of about 30% in comparable store sales.

Earnings Estimates

The Zacks Consensus Estimate for this fiscal year, ending March 2013, is currently $1.54 per share, or almost 8% better than 90 days ago. Meanwhile, the Zacks Consensus Estimate for next fiscal year, ending March 2014, has gained 11.5% in that time to $2.03, which is nearly 32% better than the previous year.

Expensive, Yet Justified, Valuation

Michael Kors currently trades at a forward P/E of 35.3, a price-to-book (P/B) multiple of 13.5 and has a P/S multiple of 6.5. All of these figures are at premiums to the peer group averages. However, given the company's compelling fundamentals, the premium is justified. Moreover, the company's trailing 12-month return on equity (ROE) of 45.8%, against 13.5% for the peer group, suggests that it actively and efficiently reinvests earnings compared to its peer group.

Shares of Michael Kors have been rising since late-December 2012 and reached a new 52-week high of $58.62 on November 2, 2012. The stock is currently trading above its 50- and 200-day moving averages, which stand at $52.00 and $47.53, respectively. Moreover, this newly listed stock has consistently outperformed the S&P 500 over the last six months. Volume averages roughly 3,455K daily.

Based in Tsim Sha Tsui, Hong Kong, Michael Kors is a well-known designer of luxury accessories and ready-to-wear products. The company sells branded women's apparel and accessories and men's apparel under the Michael Kors, MICHAEL Michael Kors, and KORS Michael Kors labels. As of September 29, 2012, the company operated a total of 349 stores worldwide, comprising 269 company-operated retail stores and 80 retail stores operated by licensing partners. The market cap of the company is $10.6 billion. Other stocks in the textile-apparel sector with a Zacks Rank #1 (Strong Buy) include Gildan Activewear Inc. (GIL), Joe's Jeans Inc. (JOEZ) and G-III Apparel Group, Ltd. (GIII).

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Zacks Investment Research ]]> Tue, 15 Jan 2013 11:00:01 GMT CECO Environmental Corp. (CECE) reported another positive surprise in its third quarter, as earnings per share beat the Zacks Consensus Estimate by nearly 27%. This air pollution control technology company has been outperforming quarterly expectations for a while now, amassing an average beat of more than 21% in the past 4 quarters.

This Zacks Rank #1 (Strong Buy) appears to have potential for even more growth moving forward, given the major booking momentum from North America and international customers, along with its focus on cost-control measures and margin improvement.

Solid Third Quarter

On Nov 7, 2012, CECO Environmental Corp. reported third-quarter 2012 earnings per share of 19 cents, beating the Zacks Consensus Estimate by 26.7% and last year’s earnings by 35.7%.

Revenues grew 0.5% year over year to $33.1 million, driven by a $1.1 million sales increase in the Engineered Equipment Technology and Parts Group (EET&P), offset by a $1.0 million decrease in the Components Parts Group (C/S).

Gross profit for the quarter increased $0.8 million or 8.2% to $10.5 million, compared with $9.7 million in the prior-year period. Gross margin for the quarter stood at 31.7% in 2012, compared with 29.5% in 2011. The increase in gross margin was primarily due to a shift to higher margin work in both the EET&P Group and the C/S Group.

Earnings Estimates on the Rise

The Zacks Consensus Estimate for 2012 increased 3.2% to 64 cents over the last 60 days, reflecting year-over-year growth of 24.8%. The Zacks Consensus Estimate for 2013 is up 1.4% to 75 cents over the last 90 days, suggesting a year-over-year increase of 18.1%.

Valuation Looks Reasonable

Currently, CECO Environmental is trading at a premium to its peers based on P/E, P/B and P/S. The premium valuation seems justified given the company’s solid earnings growth prospects. Its earnings growth expectation of 13.8% over the next five years compares favorably with the industry average of 6.80%, indicating room for further expansion. Moreover, its return on equity (ROE) of 22.8% is much higher than the peer group average of 1.6%.

The share price has increased at a higher pace than earnings over the last few years. Currently, shares are hovering around $10.00–$11.00. The consensus estimates for 2013 and 2014 are trending upward. The share price should increase at a similar or higher pace than the earnings estimate trend.

Based in Cincinnati, Ohio, CECO Environmental Corp. provides air-pollution control technology products and services worldwide. The company offers engineered equipment, cyclones, scrubbers, dampers, diverters, regenerative thermal oxidizers, component parts and monitoring and managing services. CECO Environmental Corp. has a market cap of $158.4 million.

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Zacks Investment Research ]]> Mon, 14 Jan 2013 11:00:01 GMT Landec Corp. (LNDC) has an impressive streak of positive quarterly earnings surprises, which it continued earlier this month with a nearly 44% beat in its fiscal second quarter. Meanwhile, the stock price rocketed roughly 61% last year.

Given its flurry of earnings beats, double-digit earnings growth projections, healthy growth in the fresh-cut produce category, continued product innovation and synergies from an acquisition, this Zacks Rank #1 (Strong Buy) deserves some attention from aggressive growth investors.

Seventh Straight Beat

On January 2, Landec reported a positive earnings surprise of 43.75% for its fiscal second quarter. Adjusted earnings of 23 cents per share comfortably beat the Zacks Consensus Estimate of 16 cents, marking the seventh consecutive positive surprise.

Revenues surged 41% year over year to $114.7 million, driven by a strong performance from the company’s fresh-cut specialty packaged food subsidiary Apio, Inc.'s value-added business. GreenLine Holding Company, which was acquired by Apio in April 2012, contributed $24.3 million in revenues. Landec said that GreenLine integration is progressing well and is ahead of its original plan.

By business lines, total revenues from Apio shot up 50% year over year to $106.7 million, boosted by new products and gains in the fresh-cut vegetable category. However, revenues from Lifecore Biomedical, the company’s biomaterials unit, slipped 16% to $7.7 million due to a delay in shipment and the termination of its licensing agreement with Monsanto Company (MON).

The company raised its revenues and profit growth forecasts for fiscal 2013. It now expects revenues to rise 33% to 38% year over year, compared with its earlier forecast of 30%. Moreover, it sees net income growth of 60% to 70%, up from its prior projection of 25% to 35%.

Earnings Estimates Moving Higher

Two out of three estimates have moved higher for both fiscal 2013 and fiscal 2014 over the last 7 days. As a result, the Zacks Consensus Estimate for fiscal 2013 has gained 12% to 73 cents per share, indicating an estimated annualized increase of roughly 50%.

For fiscal 2014, the Zacks Consensus Estimate rose 4% in 7 days to 88 cents per share, representing a projected year over year rise of nearly 20%.

Reasonable Valuation

Landec is currently trading at a forward P/E of 16.45x, which is higher than the peer group average of 14.85x. The price-to-book of 1.97x and the price-to-sales (P/S) ratio of 0.82 are also higher than their peer group averages. However, the premium valuation is justified given the healthy earnings trajectory.

The stock has begun to catch up with the rising earnings estimates of late, signaling the potential for further upside.

Landec Corporation makes and distributes polymer products using its proprietary polymer technologies for food and biomaterials markets. The company’s Apio unit is a leading provider of fresh-cut specialty packaged vegetables in North America. Its Lifecore subsidiary is a premium supplier of hyaluronan-based materials and medical products for ophthalmic, orthopedic, veterinary and other medical applications. Landec, which has a market cap of roughly $311 million, distributes its products leveraging its dedicated sales and marketing resources globally.

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