Schawk Inc. (SGK) just beat expectations and shares are soaring yet, thanks to rapidly rising estimates, remain a great value with plenty of growth.
Schawk, Inc. provides brand management services. The company serves the consumer products, retail, pharmaceutical and advertising sectors around the world.
Back in Black
On Mar 15 Schawk reported fourth-quarter results that included net income of $3.7 million, up from a nearly $60 loss one year ago. Earnings per shares came out to 24 cents, beating estimates by 2 cents.
Revenues climbed 12% on a year-over-year basis which is the third consecutive quarter of sequential growth. Schawk sited better margins and cost-controlling measures for the solid performance.
Following the earnings release, Schawk analysts increased full-year expectations. The Zacks Consensus Estimate for 2010 is now $1.29, up 33 cents. Next year's projections are averaging $1.56, up from $1.38. These levels represent earnings growth of 32% and 21% respectively.
Valuations and Fundamentals
One share of SGK is running just under 14 times forward earnings, a good value especially given the solid fundamentals.
Schawk boasts an ROE of 9.6%, roughly triple the average of its peers. The company operates with a net profit margin of 4.3%, easily ahead of the 1.4% into the red that its competitors operate on. Additionally, the Schawk has a debt-to-equity ratio far below the industry norm, 0.3 times compared to almost 20 times.
Shares are still trading at a good value thanks to the rapidly rising earnings estimates. Also, the current run is on heavy volume, giving the stock a much better change of continuing higher.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service