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Team Inc. - Aggressive Growth

Posted
1/23/2012 12:00:00 AM
By: Zacks.com
Referenced Stocks:TISI

Team Inc. ( TISI ) has a good long term earnings picture and the stock is a Zacks #1 Rank (Strong Buy).

Company Description

Team, Inc. provides specialty maintenance and construction services for maintaining high temperature and high pressure piping systems and vessels that are utilized in heavy industries.

Analysts see Earnings Improving

The Zacks Consensus Estimate for 2012 has been on the move, and moving the direction we like to see. In April of 2011, analysts were expecting earnings of $1.45, but since that time, estimates have moved higher to $1.68. Within the last month, the Zacks Consensus Estimate has moved up $0.07, a further sign of strength.

The story for 2013 is very similar to 2012. In June of 2011, the Zacks Consensus Estimate was $1.71, but has since moved to $1.92. This underscores the idea of consistent earnings growth that Zacks #1 Ranks (Strong Buy) typically exhibit.

Recent Earnings Release

At the beginning of the year, the company reported earnings of $0.53, topping the Zacks Consensus Estimate of $0.49 by $0.04. The 8% earnings beat translated into a 3% move in the stock. Revenue also came in ahead of expectations at $158 million, topping the estimate of 5 analysts by $3 million.

Valuation

TISI trades a premium to the industry in term of price to earnings. For trailing twelve months, the premium is a small 2 point difference, but the forward multiple is a little more "rich" with TISI trading at 17x while the industry average multiple trades at 12x.

Other metrics like price to book and EV/EBITDA show TISI trading very close to industry averages. The difference that encourages us to name TISI a good candidate for aggressive growth investors is the price to sales multiple. Trading at a significant discount to the industry average of 2.1x sales, TISI trades at only 1x sales. Future sales growth should help expand that multiple and should, as a result, increase the price of the stock.

The Chart

TISI is a Zacks #1 Rank (Strong Buy) which seen earnings expectations continue to rise. A look at the price and consensus chart shows that expectations have been moving higher and higher. We anticipate that the stock will do the same with a few more positive earnings surprises.

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Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service
 
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