STEC Inc.

With technology stocks in a multi-month bull market, it's unusual to find one that has the magical combination of both growth and value. STEC Inc. (STEC - Snapshot Report) has a PEG ratio of just 0.8.

This Zacks #1 Rank (strong buy) manufactures solid-state drives (SSDs) for OEMs with high performance needs. The company also makes flash and flash module products.

STEC Beat By 7% in the Fourth Quarter

On Feb 14, STEC reported its fourth quarter results and surprised on the Zacks Consensus Estimate by 2 cents. Earnings per share were 31 cents compared to the Zacks Consensus of 29 cents. It was the 8th consecutive earnings beat.

Revenue, however, did fall 11.4% to $93.9 million from $106 million although it was up 9.1% compared to the third quarter of 2010.

During the fourth quarter, the mix of ZeusIOP SAS interface SSDs increased to 42% of total ZeusIOPS sales from 20% in the third quarter. The company projects that sales of the SAS ZeuxIOPS SSDs will exceed the sales of the Fibre Channel ZeusIOPS SSDs during Q1 of 2011.

The sales increase means that customers are moving towards the higher-performance storage technologies.

First Quarter Guidance

STEC expects to make revenue in the range of $90 million to $92 million. Earnings per share in the first quarter are projected between 32 and 34 cents.

Zacks Consensus Estimates Jump

With the earning beat, analysts have been raising estimates for both 2011 and 2012. The 2011 Zacks Consensus Estimate has risen 16 cents to $1.25 in the last month, with 7 estimates revised higher.

That is earnings growth of 131%.

2012 is expected to be another year of tremendous earnings growth with the Zacks Consensus jumping to $1.57 from $1.14 in the prior 30 days. That is earnings growth of 26%.

STEC Is a Value Stock

While it has the magical combination of both growth and value, STEC also has a lot of the value characteristics. Its forward P/E is just 14.7, which is under the value cut-off that I use of 15x.

The company also has a price-to-book ratio of 2.9, which is just under the value parameter of 3.0.

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.

Read the full analyst report on STEC