Carbo Ceramics, Inc.
by Michael VodickaSeptember 16, 2011 | Comments : 0 Recommended this article: (0)
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Carbo Ceramics, Inc. makes and sells ceramic propant, a key ingredient used by oil-field service companies in the extraction of crude and natural gas. The company was founded in 1987 and has a market cap of $3.5 billion.
Carbo has been screaming higher for the last year, with shares advancing from $77 last fall to a recent high above $183. That movement has been supported by impressive sales and earnings growth on display with strong Q2 results from late July that came in ahead of expectations.
Revenue for the period was up 34% from last year to $150 million. Earnings also looked good, coming in at $1.29, 2% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 15% over the last four quarters.
Over the last year Carbo has been moving aggressively to increase production to satisfy surging demand. On that note, the company noted that its tracking ahead of schedule on adding capacity to one of its plants, now scheduled from completion by the fourth quarter. That will boost production by 250 million pounds, bring its total annual production capacity to 2.1 billion pounds.
Carbo's enormous earnings power has enabled it to build a pristine balance sheet, with cash and short-term investments of $53 million against no long-term debt.
We saw some movement in estimates off the good quarter, with the current year adding 9 cents to $5.46 while the next-year estimate gained 49 cents to $7.32, a bullish 34% growth projection.
But in spite of the gains, the valuation picture looks solid with a PEG ratio of .79 well below the benchmark of 1 for value.
On the chart, CRR fell with the market in July and August before aggressively rebounding over the last month. Look for support from the trend line on any weakness, take a look below.
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
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