Company Description

Monotype Imaging Holdings Inc., through its subsidiaries, provides end-user and embedded text imaging solutions for use in print, Web and mobile environments that enable people to create content on various devices worldwide. It offers a collection of approximately 14,000 typefaces consisting of owned and licensed fonts; monotype, linotype, and ITC typeface libraries; custom font design services for corporate branding and identity purposes; and PCL 6 and PostScript 3 font collections. The company's customers include consumer electronic device manufacturers, independent software vendors, and content creators. Monotype Imaging Holdings Inc. is headquartered in Woburn, Massachusetts.

Monotype Imaging Meets or Beats Estimates Seven Straight Quarters

Monotype Imaging has met or topped the Zacks Consensus Estimate in each of the last seven quarters. The average beat has been $0.02 more than the Zacks Consensus Estimate which works out to be a 14% positive earnings surprise. That is among the larger average surprises that has been profiled here in some time. As a result of the strong positive earnings surprises, the stock has moved higher by an average of 7.6% following the earnings release.

The largest price movement in the stock came the day after the company crushed estimates. The December 2010 quarter saw the company beat the topline estimate of $28 million by posting revenues of $29 million. EPS of $0.17 was $0.04 higher than the $0.13 Zacks Consensus Estimate and the stock moved higher by more than 20%.

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Monotype Imaging Most Recent Reported Earnings

On May 1, 2012 Monotype Imaging reported revenue of $34 million, approximately $1 million higher than the Zacks Consensus Estimate and up from $30 million reported in year ago quarter, an increase of 13%. Earnings per share came in at $0.20, $0.01 higher than the Zacks Consensus Estimate of $0.19. The beat of 5.3% helped lift the stock higher by about 1% in the session following the release. This marked the third straight quarter the company reported $0.20 per share in earnings.

Monotype Imaging Sees Estimates Moving Higher

Monotype Imaging has seen earnings estimates move higher following the recent positive earnings surprise. The Zacks Consensus Estimate for 2012 was as low as $0.85 in February 2011 and has since bumped higher to $0.86.

Estimates for 2013 have also seen an increase following the most recent quarterly release. The Zacks Consensus Estimate for 2013 stood at $0.96 in December 2011 and has since moved to $1.05.

Valuation

The valuation for Monotype Imaging is mostly in line with the industry average. A 17x trailing twelve months PE multiple is just higher than the 16.5x industry average. The same is true of the forward earnings multiple of 15.5X for TYPE and the 14x industry average. Price to book shows the stock trading at a slight discount to the industry average while price to sales show the stock trading at a slight premium.

The Chart

A quick look at the price and consensus chart shows a stock that has moved higher as estimates moved higher. The gap between the 2013 line and the 2012 line was probably a bit too much and could have been a single analyst estimate, so the decrease there shouldn't be too much of a cause of concern. More to that point, the 2013 line has been heading in the direction that an aggressive growth investor is looking for. Monotype Imaging has moved to a Zacks #1 Rank (Strong Buy) as of May 2, 2012.

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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