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Omnicell Inc.

by Bill Wilton

December 12, 2011 | Comments : 0 Recommended this article: (0)

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Omnicell Inc. ( OMCL - Analyst Report ) in on a hot streak with 3 straight earnings surprise. Additionally, those earnings are expected to grow rapidly for the foreseeable future, but are the valuations too high for this Zacks #1 Rank (Strong Buy)?

Company Description

Omnicell provides automated and business information solution for hospitals and healthcare companies.

Tic Tac Toe

3 earnings surprises in a row. On Oct 27 Omnicell reported quarterly results that included EPS at $0.09, a penny better than the Zacks Consensus Estimate.

Revenue was up more than 14%, to $64.4 million. That doubled net income from $1.3 million to $2.6 million. The CEO said "The marketplace continues to be very receptive" to the company's new platform and market share is growing.

Strong Growth Rates

Analysts polled by Zacks are expecting full year earnings to come in at $0.27, which is more than double the $0.13 earned in 2010.

Next year's average projection is up 2 cents, to $0.42 for a 52% growth rate. While those, and the long-term growth rate of 27%, are impressive, it is more than priced into the stock. Shares are going for almost 60 times estimates, giving OMCL a PEG of 2.2.

The industry is doing well in general, ranking 74th out of 265 and Omnicell is the top rated of 14 companies.

The Chart

Shares of OMCL responded well to the earnings news and are now pressuring the 52-week high. It could be tough to pull the trigger and buy at these levels, but if the stock gets past this point there is a lot of room to run.

Omnicell Inc. - ticker OMCL>
 
 
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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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