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Aggressive Growth

Vishay Intertechnology, Inc. (VSH - Snapshot Report) is trading at bargain-basement prices despite another earnings surprise and bullish estimate revisions.

Company Description

Vishay Intertechnology makes discrete semiconductors and other electronic components. The company's products are used in many industries including telecom, aerospace, medical, and industrial.

Topped Forecasts

On May 5 Vishay reported first quarter results that included a $34 million sequential increase in revenues, to $641 million. On a year-over-year basis it was a 42% pop.

Net income came in at over $45 million, which is up from a $29 million loss one year ago. Earnings per share broke down to 24 cents, 2 cents higher than expected and up from an 8 cent loss last year.

Lean and Mean

Vishay's President said the company has rounded out a tough 3-year period. The struggles have left the Vishay "re-focused on profitability", which should lead to record highs.

Guidance often trumps the bottom-line results, which makes sense given that the market is forward looking. You don't buy the past earnings; you are buying the future earnings potential. This is especially true in uncertain times, so the bullish comments are a great sign for Vishay.

Estimates Jump

After the news, all 5 covering analysts raised their projections. The Zacks Consensus Estimate for full-year 2010 is up 19 cents to $1.08.

Projections for 2011 are averaging $1.17, up 17 cents for the Zacks #1 Rank (Strong Buy). These growth rates are exponential given the 2 cents earned in 2009.

Shares are on Sale

Even after the third consecutive earnings surprise, bullish comments and massive growth projections, shares are still trading at just 8 times 2010 earnings.

Vishay's expected growth is a bargain, with a PEG Ration of 0.7. VSH has a price to book of only 1.1, while its peers average about 1.3 times.

The Chart

Shares of VSH took a hit after the earnings news and even harder on the "flash crash" the following day. The stock is showing signs of stabilizing and if we get a MACD crossover, it will show momentum is back on our side.

Vishay Intertechnology - ticker VSH >
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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

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