On Jan 13, Zacks Investment Research upgraded business services provider Mistras Group, Inc. (MG) to a Zacks Rank #2 (Buy) from a Zacks Rank #3 (Hold) largely on the back of record second-quarter fiscal 2015 results. The stock is currently trading at a forward P/E of 31.3x and has long-term earnings growth expectation of 10.2%.
Why the Upgrade?
Mistras reported stellar second-quarter fiscal 2015 results with revenues increasing 32% year over year for an all-time high of $206.9 million. GAAP net income for the quarter also reached a record high of $10.4 million or 35 cents per share compared with $9.3 million or 32 cents per share in the year-earlier quarter. Excluding acquisition-related items, adjusted earnings for the reported quarter were 33 cents per share, which comfortably exceeded the Zacks Consensus Estimate of 26 cents by 26.9%. Adjusted EBITDA improved 25% year over year to a record level of $28.2 million compared with the year-ago tally of $22.6 million.
This is the third consecutive quarter in which the company reported year-over-year revenue growth in excess of 20%. The Services segment of Mistras recorded solid year-over-year growth of over 48%, of which 22% was organic growth. This was primarily attributable to market share gains, a healthy fall turnaround season, and meticulous project work. The company's 32% year-over-year revenue growth was driven by a combination of inorganic growth (+19%) and strong organic growth (+14%), partially offset by weaker foreign exchange effect (-1%).
Buoyed by the strong quarterly results, Mistras also increased its revenue guidance for fiscal 2015 to a range of $720 million to $740 million, representing 16% to 19% growth over the prior year. In addition, the company expects adjusted EBITDA to be at the higher end of its previously announced range of $78 million to $84 million, representing a year-over-year growth of 11% to 20%.
All these bullish factors warrant a review of your portfolio basket to consider buying it if you are yet to have this stock or hold it for a little longer if you already own it.
Other Stocks to Consider
Some other stocks in the industry that also look promising include Franklin Covey Co. (FC), NV5 Holdings, Inc. (NVEE) and Stantec Inc. (STN), each carrying a Zacks Rank #2 (Buy).
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