) reported solid third quarter results on October 30 that included
a positive surprise of nearly 30%. The expected earnings growth
rate for this provider of engineering, technology and staffing
services is 18.0% over the next five years, which is well above the
11.7% for the industry. CDI will also be paying a quarterly cash
dividend of 13 cents per share on November 20.
Expense Control Led to a Third Quarter Beat
CDI's third quarter earnings per share (EPS) of 27 cents were up
80.0% from the year-ago quarter and ahead of the Zacks Consensus
Estimate by 28.6%.
Revenues grew 2.5% year over year to $279.4 million, on the back of
strong performances across its served industry verticals (Oil, Gas
& Chemicals, Aerospace & Industrial Equipment, and
Cost control efforts were largely responsible for the operating
Earnings Estimates Trending Upward
In just the past 7 days, the Zacks Consensus Estimate for fiscal
2012 is up 4.5% to 93 cents, which suggests year-over-year growth
of nearly 100%. Meanwhile, the Zacks Consensus Estimate for fiscal
2013 is up 0.9% to 93 cents in that time.
Valuation is Attractive
Considering the company's growth prospects, the stock's discounted
valuation makes it very attractive to own. The stock has a PEG
ratio of 1.1, compared with the peer group's 1.2. CDI is also
trading at a P/S and P/B of 0.30x and 1.20x, respectively,
representing discounts of 43.4% and 25.5% from peer group averages.
The return on equity (ROE) of 5.8% is also above the industry
average of 3.6%.
Chart Shows Growth Potential
The 12-month EPS chart clearly shows that both share prices and
earnings have remained volatile over the last few years. But the
price movement has been in tandem with EPS growth.
Currently, the share price is hovering around $17.00. The consensus
estimates for 2012 and 2013 are trending upward. The estimate
revision graph indicates a slow but steady upward trend through
fiscal 2015. As illustrated in the chart below, share prices should
increase at a similar pace with that of the estimate revision
CDI Corp. offers various engineering and technology solutions, and
professional staffing services to large and mid-sized companies
located primarily in the United States, Europe and the Asia Pacific
regions. The company operates through three segments, namely Global
Engineering and Technology Solutions (GETS), Professional Services
Staffing (PSS), and Management Recruiters International (MRI). The
company serves industries such as Oil & Gas, Chemicals,
Aerospace, Industrial Products, Hi-Tech industries, U.S. defense,
financial services, rail and mining industries. IBM (
) is one of CDI's prime clients.
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