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Aggressive Growth

BTU International sent analyst estimates higher after they reported a fourth consecutive earnings surprise in March.

Estimates have moved higher since then, pushing shares to a Zacks #1 Rank (Strong Buy) and right now might be a good time to buy on the dip.

Company Description

BTU International makes thermal processing equipment and processes for the alternative energy and electronics manufacturing industries. The company's equipment is found in solar cells, nuclear fuel, in circuit board assemblies and other areas.

Record-Breaking Quarter

Back on Mar 1 BTU International reported $27.4 million in sales for the fourth quarter, up 127% year over year and a new company record. Net income came in at $2.2 million, a sharp turnaround from the $3.9 million loss a year ago.

Earnings worked out to $0.24 per share, which was twice as much as analysts polled by Zacks were expecting. This was BTU's fourth consecutive earnings surprise and it came with comments from the CEO.

While the company expects as softer electronics business, it sees increasing demand for solar products, which now represents 60% of revenue and is climbing. BTU International expects first quarter revenues to land between $24 million and $26 million, which is up sharply from the $17.1 million brought in a year ago.

Estimates Jump

Analysts following BTU International quickly raised forecasts on the earnings news. Full-year estimate for 2011 are now averaging $0.61, up 13 cents. Next year's Zacks Consensus Estimate is up 5 cents, to $0.88.

In 2010 the company earned $0.23, putting projected growth rates at 163% and 45%, respectively. And those growth rates are reasonably priced. Shares are going for 17 times the 2011 estimate and under 12 times the 2012 projection.

Using the 2012 figure, the PEG ratio comes out to 0.8 times. Currently the price to sales ratio is 1.17, which is on par with the peer group.

The Chart

Shares of BTUI have been fairly volatile over the past few months, but the improving earnings outlook has this looking like a good chance to get in at a discount. Shares are trading lower right now and this could be a great entry point.

BTU International  - ticker BTUI>

 
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Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

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