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Encore Wire Corp (WIRE - Free Report) saw its top line swell last quarter thanks to both rising prices and volume. Earnings have turned around and estimates are on the rise.

This Zacks #1 Rank (Strong Buy) also boasts a rock-solid balance sheet and has plenty of upside.

Company Description

Encore Wire manufactures a broad range of copper electrical wire for interior wiring in homes, apartments, manufactured housing and commercial and industrial buildings.

Sales Spike 45%

On Feb 22 Encore Wire reported its fourth-quarter results that showed a 45% top-line growth, to $256 million, up from $177 million a year ago. The bulk of that improvement was due to a 36% surge in pricing, but unit sales were up 6% as well. Copper was up 31% in that span, so it looks like the company has no trouble passing input costs onto customers.

Encore Wire's bottom line showed a nice turn around, posting a $4.5 million profit, up from a $1.9 million loss. Earnings per share came out to $0.19, beating expectations by 3 cents and up from an 8-cent loss a year ago.

Great Balance Sheet

Not only has the company managed to build up over $100 million in cash, as of the end of 2010, but they also have no long-term debt. Additionally, their revolving credit was entirely paid off.

Analysts Like What They See

The Zacks Consensus Estimate for full-year 2011 is up 14 cents, to $1.26 on the earnings news. Next year's average forecast rose 11 cents, to $1.60. Given the $0.66 earned in 2010, projected growth rates are now 91% and 27%, respectively.

Valuations are looking good as well. Shares are trading at 0.6 times sales and 1.4 times book value. Earnings multiples are not too bad either. The forward P/E is about 19 times and the PEG ration is coming in at 1.4.

The Chart

Shares of WIRE were in a rut until recently. But the tides have shifted and shares are on a clear move higher. Given the optimism in the ongoing recovery there should be plenty more room to the upside.

Encore Wire Corp  - ticker WIRE>


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

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