Longtop Financial Technologies Ltd.
) recently hit a new 6-month high on strong earnings, rising estimates and a bullish growth projection. Our last look at the company's business came on August 17 when Longtop reported strong Q2 results that handily beat expectations.
Revenue for the period was up 72% from last year to $49 million. Earnings also came in strong at 27 cents, 12.5% ahead of the Zacks Consensus Estimate. The company now has an average earnings surprise of 13% over the last three quarters.
Longtop's largest segment, Software development, accounting for 79% of total revenue, was up 57% from last year to $39 million. Revenue from other services was up 169% to $10 million, where its acquisition of an IT outsourcing business contributed $2.4 million.
Awesome Balance Sheet
The company emerged from the quarter with its already strong balance sheet looking even better, with cash and equivalents up $118 million from last year to $345 million with a marginal debt load of $8 million.
Guidance and Estimates
Looking forward, Longtop noted that its first quarter its usually its weakest, and expects both income and margins to improve into Q3 and Q4. The company also said it expects this fiscal year to be the first on record to produce over $100 million in adjusted net income.
The analysts are bullish too, with the current year up 7 cents on the good quarter to $1.52. The next-year estimate jumped three cents to $1.74, a solid 14% growth projection.
Although LFT's forward P/E multiple of 25X is a premium to the S&P 500, it represents a sharp discount to its peers average of 53X.
On the chart, LFT has been rallying for the last three months, recently moving back to within striking distance of the all-time high of $41.77. The stochastic below the chart says shares are trading well away from over-bought territory. Look for support from the trend line on any weakness, take a look below.
Read the April 20 LFT article here
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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.