ION Geophysical Corp recently jumped sharply on its fantastic earnings results. The company doubled the consensus estimate and things are looking good for 2011.
This Zacks #1 Rank (Strong Buy) analysts are pushing estimates higher and are expecting earnings to triple this year.
ION Geophysical provides geophysical technology and services to the global oil & gas industry. E&Ps use the company's variety of seismic imaging technologies to reduce risks on land as well as marine and arctic settings.
On Feb 16 ION Geophysical announced solid fourth-quarter results that showed a 31% increase in revenues, to $159 million. Net income came out to $20 million, well ahead of the $52 million loss the year prior.
Earnings per share for the quarter was $0.14, which was double the $0.07 that Wall Street was expecting. This was the second consecutive surprise for ION Geophysical.
The company did not provide specific earnings guidance but said it expects the momentum from the end of 2010 to carry over into 2011. Bob Peebler, CEO, said "We now feel that we have a little wind to our back and that the industry is on a full recovery path."
At the end of the day, what really matters is how analysts change their earnings outlook and that trend is looking great. The Zacks Consensus Estimate jumped 12 cents, to $0.47 on the earnings report.
NExt year's forecasts are up 9 cents, to $0.69. If ION Geophysical can hit those targets, the annual growth rates will be 197% this year and another 45% in 2012.
Shares of IO popped on the earnings surprise, which may keep some at bay for now. But given the strength of the earnings estimate revisions, there is still room to keep going. This is a better short-term play than long-term, so make sure to watch for even the slightest weakness in revisions.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service