China Automotive Systems, Inc.

China Automotive Systems, Inc. (CAAS - Snapshot Report) recently rebounded from a key trend line that has been in play for the last year after reporting a 79% earnings surprise on May 6. This Zacks #1 rank socks now has an average earnings surprise of 62% over the last four quarters to go along with a bullish 15% next-year estimate.

First-Quarter Results

We got an update on China Automotive's business on May 6 with better than expected Q1 results. Revenue for the period was up 88% from last year to $84.2 million. Earnings also came in strong at 34 cents, 79% ahead of the Zacks Consensus Estimate. The company now has an average earnings surprise of 62% over the last four quarters.

China Automotive complimented its top-line growth with solid cost management, with its gross margin climbing to 26.8% from 24.4% last year. Operating income was up 124% to a quarterly record of $16 million.

Balance Sheet

With the strong operating cash flow, the company was able to boost its cash position by $8 million to $51 million against a total debt load of $33 million.

Estimates Jump

Estimates jumped higher on the good quarter, with the current year adding 21 cents to $1.12. The next-year estimate is up 21 cents to $1.29, a solid 15% growth projection.

Valuation

On the back of some recent weakness in shares, the valuation picture has sweetened, with its forward P/E multiple of 17X beating its peer's 23X.

The Chart

CAAS recently rebounded from a key trend line after hitting a new all-time high earlier in the year. The MACD below the chart is bullish, with the short-term average advancing ahead of its long-term counterpart. Take a look below.

Read the April 14 CAAS article here

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.

Read the full analyst report on CAAS