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Aggressive Growth

Bill Wilton

Transcend Services

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Transcend Services (TRCR) just topped analyst expectations yesterday and shares are on the rise. Even though estimates haven't started coming in yet, the stocks still has great growth rates and valuations.

And, it should only get better for this Zacks #1 Rank (Strong Buy).

Company Description

Transcend Services provides clinical documentation services for healthcare organizations, included transcription, data extraction and reporting tools.

Just Surprised

Transcend just beat earnings expectations on May 5 when they reported earning per share of $0.34 compared to the Zacks Consensus Estimates of $0.28. This gives the company back to back earnings surprises.

Revenue was up 32% to $29.3 million, on a year over year basis, driven by surging volumes. Transcend said it "dramatically exceeded" its own outlook.

Bullish Estimates

Because the surprise was just yesterday, we do not have any new estimates just yet, but forecasts were rising into the number. When you see projections rising into the number, that number topped and then shares move higher; it is extremely likely that analysts will raise their outlooks.

Right now, the Zacks Consensus Estimate is at $1.21 and next year's is at $1.39. Given the $0.87 Transcend earned in 2010, expected growth rates are currently 39% and 16%, respectively, and that should be on the rise very soon.

Valuations

The forward P/E is nearing 20 times but, again, that is ahead of upward estimate revisions. Also, even with that P/E we are stil getting a PEG ratio of 1.0, which is a bargain.

The Chart

A few years ago the outlook for Transcend’s earnings were rocky, to say the least. But look just how much they have righted the ship in the last year or 2. Big year over year growth and sizable revisions throughout the years.

Read the February 9th Feature Here

Transcend Services - ticker TRCR >
 
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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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