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Aggressive Growth

Brian Bolan

HiSoft Technology

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HiSoft Technology (HSFT) is a Zacks #1 Rank (Strong Buy) and following two consecutive earnings beat and higher earnings estimates.

Company Description

HiSoft Technology International Limited, through its subsidiaries, provides outsourced information technology and research & development services. Its IT services include application development, application testing, application maintenance services for custom applications, as well as implementation and support services for packaged software.

Five of Seven Positive Earnings Surprises

HSFT has reported a positive earnings beat in five of its last seven quarters. Of the two that were not earnings beats, there was an earnings miss of $0.01 in the March 2011 quarter and an earnings meet in the June 2011 quarter.

Over the last four earnings reports, the company has beat the Zacks Consensus Estimate by an average of $0.02 for about 6.7%. The two recent beats are great signals for aggressive growth investors, having increased from the earnings meet (0.0% surprise) up to 11% in the September 2011 quarter and an increase to 17% for the December 2011 quarter. That is positive earnings momentum.

HSFT Recently Reported Earnings

On February 29, 2012 the company reported revenue of $65 million $2 million higher than estimates and up from the $42 million posted in the year ago period. Earnings per share came in at $0.27 up from $0.06 posted a year ago and $0.04 ahead of the Zacks Consensus Estimate. The stock traded higher by 14% on the day following earnings and then another 13% the next day.

Earnings Estimates Bumped Up

Following the most recent earnings report, analysts bumped up their earnings estimates for 2012. The Zacks Consensus Estimate for 2012 EPS moved from $0.90 in January 2012 to the current level of $0.95.

Valuations

HSFT trades at a higher trailing and forward PE when compared to the industry average. The 16x forward multiple could see expansion with more earnings beats and consistent revenue growth. Another metric shows HSFT shares trading more in line with the industry average as the price to book multiple of 2.5x is slightly above the 2.2x average.

The Chart

HiSoft Technology chart shows just what aggressive growth investors are looking for, a solid break out driven by strong earnings growth. With shares now trading above the trend line of the 200 day and 50 day moving averages, the stock appears primed for solid run. HSFT is a Zacks #1 Rank (Strong Buy).

HiSoft Technology - ticker HSFT>
 
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Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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