Orthofix International N.V.

Orthofix manufactures devices for the spine, orthopedics and sports medicine markets.

Headquartered in Curacao, its devices offer solutions for adult and children pediatric deformities, internal and external fracture fixation, interbody fusion, biologics and bone growth stimulation and MIS and bracing.

Over the last decade, the company has grown through acquisition.

Orthofix Surprised By 15% in the Second Quarter

On July 28, Orthofix reported its second quarter results which beat the Zacks Consensus by 7 cents per share. Earnings per share were 54 cents compared to the consensus of 47 cents. It also easily beat the year ago period, when EPS was just 42 cents.

Sales rose 4% to $142.8 million compared to the second quarter of 2009.

The quarter was boosted by continuing improvement in the Spinal Implants and Biologics division which saw sales increase 10% and by a 12% increase in the Spine Stimulation division. Orthofix manufactures the only FDA-approved stimulator for the cervical spine.

Full Year Guidance Raised

Given the better than expected second quarter results, Orthofix raised its full year guidance by 10 cents per share to a new range of $2.48 to $2.52 per share.

The Zacks Consensus for 2010 is already higher than the company's guidance range. 4 estimates have moved higher in the last 30 days pushing the consensus up by 2 cents to $2.57 per share, or 5 cents above the company's guidance range.

Analysts expect earnings growth of 46.9% in 2010.

However, for 2011, growth projections are suspect with analysts looking for less than 1% earnings growth.

Orthofix is expected to report third quarter results on Oct 28.

Value Characteristics

Orthofix has all the elements of a good value stock. It has a forward P/E of just 12.3, which is well under even its peers at 17.6.

Its price-to-book ratio is in the value range at just 2. The company even has a value priced price-to-sales ratio of just about 1.0.

Orthofix has a stellar return on equity (ROE) of 17.5% which is stronger than its peers at 15.4%.

Orthofix is a Zacks #1 Rank (strong buy) stock.

Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.