Geospace Technologies Corp.
) moved past its 52-week high following its December 11 quarterly
report, which included year-over-year gains in earnings and
revenue. With order and revenue growth expected throughout 2013,
this Zacks #1 Rank (Strong Buy) scientific and technical
instruments manufacturer appears set to fly.
Q4 EPS & Revs Grow Y/Y
Geospace Technologies reported fourth quarter earnings per share
(EPS) of 33 cents, which missed the Zacks Consensus Estimate but
advanced 17.9% from the year-ago quarter.
Net sales increased 12.6% from last year to $36.9 million. A delay
in order delivery to Statoil ASA (
) (which is now scheduled in the first/second quarter of 2013)
resulted in the lower-than-expected revenue.
Upbeat Revenue Guidance
Management expects a solid rebound in its revenues in fiscal 2013,
aided by order pull-ins and additional revenue recognitions from
contracts signed earlier this year. The company also believes that
a new $160.0 million contract from Statoil will boost its revenue
growth in the coming 2-3 years. Geospace Technologies estimates
that roughly 45% of Statoil's contract will be recognized in 2013,
40% in 2014 and the remaining 15% in 2015.
The company also expects that the revenue boost will neutralize its
continuous investments in materials and equipment, and support
margin expansion as well as increased profitability.
Earnings Estimate Revision
In the last 30 days, the Zacks Consensus Estimate for fiscal 2013
increased 6.2% to $5.86 per share, as 3 of 8 estimates were revised
Premium Valuation is Justified
Currently, Geospace Technologies is trading at a P/B of 5.2 and a
P/S of 5.8, both of which are at premiums to the peer group
averages of 1.5 and 0.7, respectively. Its ROE of 17.4% is higher
than the peer group's 7.9%. Considering the growth potential and
high value contract wins, the premium valuation seems justified.
Shares have jumped 109.54% in the past 6 months, compared to an
8.9% increase for the S&P 500. Its strong revenue growth
potential has sparked the stock price increase. It is currently
trading well above its 50-day and 200-day moving averages of $73.43
and $57.04, respectively.
OYO Geospace Corporation was renamed as Geospace Technologies
Corporation in 1980. The company primarily deals in manufacturing
and selling of instruments and equipment used by the oil and gas
industry. The company helps its customers in the acquisition and
processing of seismic data as well as in reservoir characterization
and monitoring activities. The company currently has 1,164
employees and a market capitalization of $1.12 billion.
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