FARO Technologies, Inc - Aggressive Growth
16 November 2011 - 11:00AM
Zacks
Increasing margins, a surging top line, and a better than expected
quarter are just a few things
FARO Technologies, Inc. (FARO)
has going for it. Valuations may be a bit high, but that doesn't
mean there isn't money to be made with this Zacks #1 Rank (Strong
Buy).
Company Description
FARO Tech makes computerized measurement and imaging devices.
Products are used to make and analyze 3-D models for manufacturing
and other specialty applications.
Top Line Swells 43%
FARO Tech reported quarterly results on Nov 2 that showed a 43%
jump in sales, to $65 million. Bookings were up almost 29%, to $60
million.
Net income was up 176% to $6.4 million. That put EPS well ahead
of expectations, at $0.38 versus the Zacks Consensus Estimate of
$0.29. The positive surprise snapped a 2-quarter streak of
misses.
Estimates Tick Higher
After the earnings report analysts raised full-year projections,
accounting for the surprise and then some. Analysts polled by Zacks
are expecting FARO Tech to earn $1.26 per share this year, up 11
cents.
Next year's Zacks Consensus Estimate rose 4 cents, to $1.85. In
2010 the company made $0.68, which puts growth rates at 86% and
46%, respectively.
Efficiency Continues to Improve
Analyst reports continue to highlight the company's widening
margins and expect that to continue through next year. FARO Tech
also carries a healthy cash balance, near $120 million.
Priced for Perfection
The fundamental story looks good, but right the market is
pricing in the improving operating leverage and rising sales.
With a stock going for 25 times next year's estimates, a PEG at
1.7, and a price to sales near 3.2 the company has little, if any,
room for error.
The Chart
While the stochastic is currently showing shares are
"overbought" that has been the case for several weeks. Yet the
stock continues to climb. We could see some resistance near the
52-week high.
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