Top Performer for Thurs: Valassis (VCI)

Shares of Valassis (VCI - Snapshot Report) have soared more than 17% Thursday on the back of a solid third-quarter report, which included an earnings surprise and a raised guidance.

The media and marketing services company easily makes the Zacks #1 Rank Top Performers List today. Meanwhile, volume has jumped to more than 1.3 million shares, compared to the daily average of 611,000.

As it has stated in the past, VCI sees a permanent change in the behavior of shoppers toward value, which bodes very well for a company that specializes in coupon books and fliers.

VCI offers a wide range of marketing services to customer packaged goods manufacturers, retailers, technology companies and other customers. It is the only company that provides a combination of home-delivered media products and services at the market, neighborhood and household targeted levels, and can integrate all three levels of targeting into a single solution.

VCI is 1 of only 2 companies from the Printing-Commercial industry on today's Zacks #1 Rank List, which includes 228 stocks at the moment. The other company is Schawk, Inc. (SGK - Snapshot Report).

Third Quarter

Excluding items, Valassis just reported third-quarter earnings per share of 32 cents, which was 2 pennies better than the Zacks Consensus Estimate. This is the third straight quarter of better-than-expected earnings. The result also reversed a year-ago loss.

Revenue, however, declined 3.5% to $544.1 million, though the company says it is seeing signs of revenue stability. (The decline would have been only 2.8% if revenue of $3.8 million from divested and discontinued businesses from the prior quarter was excluded.)

But the biggest news in the quarter for VCI was its outlook. The company increased its 2009 adjusted EBITDA guidance to between $255 million and $265 million, instead of $245 million. Net earnings are now expected at $64.8 million to $71 million, compared to $62.4 million previously.

"We are once again raising guidance as our employees' continued cost management and optimization efforts have exceeded our expectations," said Executive VP/CFO Robert L. Recchia. "As we begin to see signs of revenue stabilizing, we believe that our cost structure positions us well for earnings growth as we enter 2010."

Earnings Estimates

The past month has seen earnings estimates gain ground for Valassis. The Zacks Consensus Estimate for this year is at $1.34 per share, which is up 10.7% in 30 days from $1.21.

The Zacks Consensus Estimate for next year is pegged at $1.43, up 6.7% from 1 month ago and suggesting year-over-year profit growth of 6.7%.

It will be interesting to see the impact of this report on earnings estimates in the coming days. There are currently 3 covering analysts for this year and 2 for next.