Sun Hydraulics Corp (SNHY) has been trading strong in the recently volatile market, recently rebounding from a key trend line to move back within striking distance of the 52-week high at $54.34. Estimates have since jumped higher, providing more support and momentum for this Zacks #1 Rank stock.
Company Description
Sun Hydraulics Corp. and its subsidiaries engage in the design and manufacture of various hydraulic valves and components worldwide. The company was founded in 1970 and has a market cap of $826 million.
Industrial goods companies have been jumping higher over the last year as demand spikes on an improving global economy. That trend was on display in early May when Sun reported strong Q1 results that came in ahead of expectations.
First-Quarter Results
Revenue for the period was up 60% from last year to $50.7 million. Earnings also looked good, coming in at 57 cents, 24% ahead of the Zacks Consensus Estimate, its biggest surprise in the last four quarters.
The company said it has seen a sharp up tick in demand and that it has been able to scale its production accordingly. It also said it sees recent momentum in its business carrying on throughout 2011.
Financial Profile
Coming out of the quarter, Sun’s excellent balance sheet was well intact, with cash and short-term investments up $17 million to $45 million against no long-term debt.
Estimates
We saw some very bullish movement in estimates off the good quarter and company’s optimistic tone, with the current year jumping 22% to $2.20. The next-year estimate is pegged at $2.58, a bullish 17% growth projection.
Valuation
In light of recent gains, the valuation picture does look a bit pricey, with Sun’s forward P/E of 23X a premium to its peer average of 18X.
12-Month Chart
On the chart, Sun has spent most of the last year trending higher, jumping into a new 52-week high on the good quarter from early May. Look for support from the trend, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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