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Aggressive Growth

Commercial Vehicle Group (CVGI - Snapshot Report) is a Zacks #1 Rank (Strong Buy) following two straight positive earnings surprises and higher earnings estimates.

Company Description

Commercial Vehicle Group, Inc., together with its subsidiaries, designs and manufactures cab related products and systems for the commercial vehicle markets worldwide. It offers seats and seating systems comprising mechanical and air suspension seats, static seats, bus seats, heavy truck seats, and construction and other commercial vehicle seats. Commercial also manufacturers office seating products for various office environments, such as emergency services, call centers, receptions, studios, boardrooms, and general office, as well as electronic wire harnesses and panel assemblies. Commercial Vehicle Group, Inc. was founded in 2000 and is headquartered in New Albany, Ohio.

Commercial Vehicle Group Beats Expectations for Two Straight Quarters

Commercial Vehicle Group has topped the Zacks Consensus Estimate in each of the last two quarters. Both surprises were big, and exactly what aggressive growth investors look for in terms of accelerating earnings and stronger beats. The September 2011 quarter saw revenue of $217 million, $6 million more than expected and EPS of $0.26, $0.05 higher than the Zacks Consensus Estimate.

As a result of the 23% positive earnings surprise in the September 2011 quarter, the stock moved higher by more than 17%. That followed a 19% drop after the company missed estimates in the June 2011 quarter.

Commercial Vehicle Group Recently Reported Earnings

On February 15, 2012 the company reported revenue of $226 million approximately $6 million more than the Zacks Consensus Estimate and higher than the $158 million reported in the year ago period. EPS of $0.36 was $0.11 higher than the Zacks Consensus estimates and well above the $0.14 of EPS from the prior year. Following the report, the stock moved higher by 5.6%.

Earnings Estimates Move Higher

Following the most recent earnings release, analysts have bumped up their estimate for 2012. Prior to the release, analysts were expecting EPS of $1.16 for Commercial Vehicle Group in 2012. The current Zacks Consensus Estimate is calling for $1.38 a share in EPS.

Valuations

Commercial Vehicle Group's valuation is very attractive, but has one glaring exception. The trailing PE of 10x is slightly below the industry average of 11x. The forward PE of 7x looks even better when compared to the 10.6x industry average. Price to sales is mostly in line with the industry average as well. The glaring exception is price to book. The company trades at 21x compared to the 1.8x industry average multiple. This multiple alone is not enough to keep investors away, as the other valuation metrics are very attractive.

The Chart

When we look at the price and consensus chart for Commercial Vehicle Group, we see a stock that has trailed behind the earnings estimates. This could be due to a few negative earnings surprises in the past, but also generally indicates that the stock is undervalued. The low PE multiples for this stock suggest it has more to do with being undervalued than the recent miss. Commercial Vehicle Group is a Zacks #1 Rank (Strong Buy).

Commercial Vehicle Group - ticker CVGI>
 
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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 You can follow him at twitter.com/bbolan1

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