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Momentum

Geospace Technologies Corporation (GEOS - Snapshot Report) is a manufacturer of scientific and technical instruments for the oil & gas industry that has been seeing increased demand for its products. This was evident in the company’s fiscal third-quarter report, which included year-over-year improvements in EPS and sales. This Zacks #1 Rank (Strong Buy) is also gearing up for a 2-for-1 stock split in the next few days.

Driving Catalysts

On August 2, Geospace Technologies reported fiscal third quarter earnings per share of $1.67, compared to $1.44 last year. However, it missed the Zacks Consensus Estimate of $1.95. Net sales increased 19% based on strong demand for the company’s products.

Besides the financial results, the company is also preparing for a 2-for-1 stock split in the form of a 100% stock dividend payment. The split will occur on October 18. The stockholders of record as on October 15 will be getting one additional stock for each stock held.

Earnings Estimates Moving Higher

Over the last month, two of 6 estimates moved higher for fiscal 2013 (ending September 2013), boosting the Zacks Consensus Estimate by 16% to $8.98.

Valuation & Technicals

Geospace Technologies Corporation is currently trading at a forward P/E multiple of 15.3x, a 10.0% premium over its peer group average of 13.9x. On a P/S basis, shares trade at 4.7x, versus the peer group average of 1.4x. The company offers a ROE of 17.9% versus a peer group average of 7.0%.

As the chart below shows, share prices have been rising since the beginning of calendar 2009. The future outlook also seems bright as the Zacks Consensus Estimates are trending higher for the years to come.

Headquartered in Houston, Texas, Geospace Technologies Corporation was incorporated in 1980. The company primarily deals with the manufacturing and selling of instruments and equipment used by the oil and gas industry. Currently, the company has a market capitalization of approximately $876 million.


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