IEC Electronics Corp.
), a leading provider of electronic manufacturing services ("EMS"),
surpassed the Zacks Consensus Estimate by 15.8% in the third
quarter of fiscal 2012, leading to some upward movement in
analysts' earnings estimates. This Zacks #2 Rank (Buy) stock also
has a forward price-to-earnings (P/E) multiple of just 7.9 and a
price-to-sales (P/S) multiple as low as 0.4, making it a true value
IEC Electronics reported strong third quarter 2012 results on July
31 with earnings of 22 cents per share, which exceeded the Zacks
Consensus Estimate by 3 cents or 15.8%. The better-than-expected
earnings were primarily driven by strong revenue growth and margin
Revenue climbed 4.0% from the prior-year quarter to $36.0 million.
Gross profit expanded 160 basis points to 20.6% driven by a
favorable product mix. Operating margin expanded 220 basis points
to 9.8%, primarily driven by a strong revenue base and lower
IEC Electronics expects organic sales to increase 9% to 14% for
fiscal 2012. The company also reiterated its long-term annual
organic growth target of 17%.
Earnings Estimates Moving Up
Earnings estimates have moved higher over the last 60 days. For
2012, the Zacks Consensus Estimate increased 1.3% to 76 cents,
representing year-over-year growth of 33.3%. For 2013, the Zacks
Consensus Estimate of 85 cents improved 2.4%, reflecting a
year-over-year improvement of 11.2%.
Shares Remain Undervalued
In addition to low P/E and P/S multiples, the stock looks
attractive with respect to its price-to-book (P/B) multiple of just
1.57. A P/E below 15.0, a P/S ratio less than 1.0 and a P/B ratio
under 3.0 generally suggest a value stock. Moreover, its return on
equity (ROE) of 20.6% is much higher than the peer group average of
New York-based IEC Electronics Corp. provides electronics
manufacturing services on a contractual basis. It serves a number
of sectors, including Military & Aerospace (56% of total
revenue in fiscal 2011), Industrial & Communications (21% of
total revenue in fiscal 2011) and Medical & Other (21% of total
revenue in fiscal 2011).
IEC Electronics' backlog jumped 33.0% to $121.5 million at the end
of fiscal 2011. The company faces significant competition from
Flextronics International Ltd. (
), Benchmark Electronics Inc. (
) and Plexus Corp. (
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