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Aggressive Growth

Bill Wilton

Ballantyne Strong, Inc.

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Ballantyne Strong, Inc. is showing rapid growth projections as the company expands its facilities to meet increasing global demand.

Company Description

Ballantyne Strong makes digital cinema projection equipment. The company also provides related services, the actual screens themselves, specialty lighting and other related products and services.

Revenue Jumps 67%

On Aug 9 Ballantyne Strong reported second quarter results that showed a 67% increase in revenues, to almost $33 million, the highest level the company has seen. Net earnings tripled to $2.8 million, or 19 cents per share.

Heading into the earnings release, analysts were looking for EPS to come in at just 6 cents, giving the company back-to-back beats.

Ballantyne Strong said they are moving forward with a plan for a $6 million expansion in an effort to meet the increasing global demand.

Estimates Moving Higher

Following the earnings release, the Zacks Consensus Estimate for 2010 jumped 13 cents, to 39 cents per share. Next year's forecasts are averaging 51 cents per shares, up 13 cents.

Given the 16 cents earned in 2009, this Zacks #1 Rank (Strong Buy) is expected to grow 144% this year and another 30% in 2011.

Valuations

The valuations aren't going to be bringing traditional value investors into the stock, but shares are fairly priced. At first glance, the forward P/E of 22 times seems steep, but given the PEG of 1.1, the growth makes BTN worth the price.

The Chart

Shares of BTN popped on the earnings surprise, but the market tanked right after, dragging them down as well. Since then, shares have bottomed and regained momentum, which could carry them back to the all-time high set in early August.

Ballantyne Strong, Inc. - ticker BTN >
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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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