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Bull Of The Day: Nova Measuring Instruments (NVMI)

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Nova Measuring Instruments (NVMI - Free Report) is a Zacks Rank #2 (Buy) and is participating in a broad recovery trade in the chip space.  In early June, this stock was breaking out over $31 per shares, but the breakout turned into a breakdown and the stock traded back to the $27 range as earnings were released at the start of August.  Since that time, the stock has been climbing and today it is the Bull Of The Day.

Description

Nova Measuring Instruments makes and sells process control systems used in the manufacture of semiconductors. The company offers in-line optical and x-ray stand-alone metrology systems, as well as integrated optical metrology systems that attach directly to wafer fabrication process equipment.  Nova Measuring Instruments was founded in 1993 and is headquartered in Rehovot, Israel.

Recent Earnings Report

On August 1, the company reported EPS of $0.46 and that was $0.04 ahead of the Zacks Consensus Estimate of $0.42.  That translates to a positive earnings surprise of 9.5%.

The company also guided Wall Street at that time.  The company expects 3Q EPS to be between $0.37 and $0.49.  At the time the Wall Street Consensus was calling for $0.46.  Revenues are expected to be between $58M and $64M and that too falls in line with the expectation that was at $62.8M at the time.

Earnings History

One part of the Zacks Rank focuses on the earnings history for a stock.  I took a quick look at NVMI and knew that it was a winner right away, and mosty due to this chart:

 

As you can see in the chart above, NVMI has not missed since 2015.  That is more than three straight years of beating the number.  This speaks to management's ability to guide Wall Street to the proper level for EPS.  No one wants to hold a stock over the long term that gives them a worry about whether or not the stock will beat expectations.

Estimates

I see little movement here in estimates, with this quarter holding firm at $0.43 and next quarter actually coming down from $0.51 to $0.46. Despite that nickel in movement, the full year number is at a standstill of $1.90.

Next year has a small bump higher of $0.02 and that number is at $2.12. So there is good implied earnings growth for next year.

Valuation

This stock has a B for value and I like the 15x trailing and forward multiple for this stock. Price to book at 3x is right where we want to be, just a little below the industry average. Price to sales of 3.4x is a little high, but there has been steady 10% growth in revenue on an annual basis.

Chart

 

 

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