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Shares are showing great valuations and will only get better as analysts start to raise full-year forecasts. Is now a good time to get into this Zacks #1 Rank (Strong Buy)?
Northwest Pipe makes welded steel pipe and other similar products. The company operates in 2 segments; Water Transmission and Tubular Products that are used in the energy, construction, ag and industrial markets.
On Aug 5 Northwest Pipe reported quarterly results that showed an impressive 50% increase in sales, to $144 million. Increases were due to a balance of pricing and volume.
Net income turned the corner, from a $1.4 million loss to a $5.8 million profit. Earnings worked out to $0.57 per share, 33 cents higher than the Zacks Consensus Estimate. This was the third surprise in the past 4 quarters.
Estimates Moving Higher
The Zacks Consensus Estimates were up into the number, but analysts haven't had time to start raising projections with the new results. The full-year estimates for this year have almost doubled in the past 3 months, from $0.68 to $1.32 on average.
Next year's consensus is up 66 cents, to $2.06 in that span. That puts next year's growth rate at 56% after this year's sharp turnaround.
Shares of NPWX are trading right near book value and with a price to sales of 0.6, both metrics showing a good value. The forward P/E is about 19 times, which is not too bad considering the growth potential moving forward especially considering more upward revisions are right around the corner.
It will be a major gut check to get into NWPX right now, as with anything out there. But with share looking so oversold, estimates rising and potential stability in the stock this could be a great time to get buy.
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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