China Automotive Systems, Inc.

China Automotive Systems, Inc. (CAAS - Snapshot Report) has been charging higher for the last six weeks, recently moving within striking distance of the 52-week high at $27.17 on much better than expeced Q4 results from late March that included 119% sales growth.

Company Description

China Automotive Systems, Inc., through its interest in Sino-foreign joint ventures, engages in the manufacture and sale of automotive systems and components for the auto industry in China. The company was founded in 2003 and has a market cap of $593 million.

Fourth-Quarter Results

Revenue for the period was up 119% from last year to $84 million. Earnings also came in strong at 21 cents, 11% ahead of the Zacks Consensus Estimate. The company has surprised in each of the last four quarters by an average of 64%.

China Automotive gained in a couple of key categories, with gross margin up 100 basis points from last year to 29%. Cash flow from operations was $35 million, with free cash flow coming in at $17.5 million. The company also has a solid cash position of $43.5 million.

Estimates

Estimates have been a bit mixed lately, with the current year holding steady at 91 cents, and the next year up 13 cents to $1.08, a bullish 19% growth projection.

Valuation Metrics

In light of recent gains, shares of CAAS do look a bit pricey, trading with a forward P/E multiple of 24X, a premium to the overall market and the industry average. China Automotive's P/B of 4.8X is also above the industry average but below the S&P of 4.9X. The company's ROE of 23% crushes the industry average of 2% but trails behind the S&P by 100 basis points.

The Chart

Shares of CAAS dipped lower early in the year but have been trending higher since bottoming out in early February just above $14. Since then, shares of CAAS have rallied back to the $22 mark along a nice trend line, only $5 away from the 52-week high at $27.17. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.

Read the full analyst report on CAAS