) is a Zacks #1 Rank (Strong Buy) after posting five of six
positive earnings surprises.
Sun Hydraulics Corporation, together with its subsidiaries,
designs, manufactures, and sells screw-in hydraulic cartridge
valves and manifolds used in hydraulic systems to industrial and
mobile customers worldwide. Sun Hydraulics Corporation was founded
in 1970 and is based in Sarasota, Florida.
SNHY Tops Expectations in Five of Last Six
Sun Hydraulics has beaten the Zacks Consensus Estimate in five of
the last six quarters. In those five beats, the company has topped
estimates by an average of more than 8%, and Wall Street has not
really taken notice. Following the beats, the stock has moved by an
average of 2%, but that includes negative moves of 10% and 5% in
two of the quarters.
The 10% slide in the stock came following the September 2011 report
where the company beat on the top and bottom lines. A 12% positive
earnings surprise and a beat of $1 million on the top line was over
shadowed by weak corporate guidance. As a result, investors sold
Sun Hydraulics Most Recent Earnings Report
On March 12, 2012 the company reported revenue of $46 million
roughly in line with the Zacks Consensus Estimate and higher than
the $42 million reported in the year ago period. EPS of $0.24 was
$0.04 lower than the Zacks Consensus Estimate or a 14% earnings
miss. Following the report, the stock moved lower by 3%.
Next Earnings Report In May
un Hydraulics reports earnings again in mid-May. The Zacks
Consensus Estimate is calling for $53 million in revenue and $0.39
of EPS. In the year ago quarter, the company reported revenue of
$51 million, $4 million ahead of expectations and EPS of $0.38,
roughly $0.07 or 24% ahead of the Zacks Consensus Estimate. As a
result, the stock moved higher by more than 18% following the
Sun Hydraulics has a reasonable valuation despite trading slightly
higher than the industry average for most of the commonly used
metrics. A trailing twelve months PE of 16x is higher than the 12x
industry average, while the forward PE of 15x shows a little more
of a premium to the 10x industry average. Price to book comes in
well above the industry average, but price to sales shows the
largest premium. At 3x sales, Sun Hydraulics trades at a
significant premium to the 0.75x industry average.
A quick look at the recent price action for Sun Hydraulics shows
the stock has had a round trip move from $24 to $33 and back again.
In eliminating the gains the stock had made in 2012, the stock also
was able to cross the 200 day moving average line, depicted below
in red. This move brings the stock the bottom of edge of an up
channel that stock has been in over the last months when a baseline
low was created in October 2011. A return to positive earnings
surprises will bring back positive attention to a stock that has a
very reasonable valuation and a bounce off the lower end of the
upward channel could be just what momentum investors are looking
for. Sun Hydraulics is a Zacks #1 Rank (Strong Buy).
Brian Bolan is the Aggressive Growth Stock Strategist for
Zacks.com. He is also the Editor in charge of the
Run Investor service
You can follow him at
SUN HYDRAULICS (
): Free Stock Analysis Report
To read this article on Zacks.com click here.