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Brush Engineered Materials Inc. (BW) soared on its recent earnings surprise. Earnings were up sharply as the company set records for quarterly and annual revenues.

Analysts keep raising estimates for this Zacks #1 Rank (Strong Buy) and there are plenty of gains to be had in the future.

Company Description

Brush Engineered Materials supplies highly customized and advanced materials including precious and non precious metals, coatings, alloys and composites.

Huge Quarter

On Feb 24 Brush released fourth-quarter and full-year results that blew the market away. Quarterly sales hit a record $356 million, up 65% from $215 million.

Net income more than tripled to $12.6 million, or $0.61 per share. That mark was well ahead of the $0.46 that analysts were looking for, making it the fourth consecutive earnings surprise. The sharp improvement was thanks to stronger than expected demand, coupled with lower than expected costs.

"Breakout Year"

The CEO described 2010 as a "breakout year" as the company saw record-setting annual sales and drastic improvements in profitability and margins. Brush also went on to provide guidance that pleased analysts.

Estimate revisions were unanimously higher for 2011 and 2012. The Zacks Consensus Estimate for this year is up 11 cents, to $2.43. Next year's average forecast jumped 40 cents, to $2.82. If Brush hits these targets the annual growth rates will be 3% and 16%.

Valuations & Comparisons

When it comes to earnings-based measures, BW isn't quite a value but not overvalued either. The Forward P/E is at 17 times and the PEG is 1.4. However, with a price to sales of 0.65 times, Brush is well ahead of its peer group.

Brush is the top rated of 30 companies in its industry. Currently the company has an impressive 13.3% ROE and 11.5% ROI, both beating the peer group.

Upcoming Name Change

The company will be changing its name to Materion Corporation as of March 8th. On that date, shares will start trading under the new ticker, MTRN.

The Chart

Shares of BW soared about 20% on the earnings surprise, but the stock has held onto those gains, even in a dicey market that could have easily led to profit taking. Long-term prospects look good, so more upward estimate revisions should keep pushing BW higher.

Brush Engineered Materials Inc.  - ticker BW>


Bill Wilton is the Aggressive Growth Stock Strategist for He is also the Editor in charge of the market-beating Zacks Small Cap Trader service

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