TransAct Technologies Inc.
(TACT - Snapshot Report
) has made its way to a Zacks #1 Rank (Strong Buy) thanks to the latest earnings surprise and subsequent estimate revisions. Also, after the rough summer and early fall, shares are priced at a deep discount.
TransAct Technologies Inc. makes market-specific printers for transaction-based industries. Printers are used at points-of-sale, kiosks, casinos, banking, and other areas.
Tic Tac Toe
On Aug 9 the company reported its third consecutive earnings surprise, with earnings per share of $0.16. That is 3 cents higher than expected and up 4 cents from a year ago.
Lottery printer sales more than doubled helping the top line grow 6.5%, to $17.5 million. Margins continued to improve as well.
The average forecast for this year rose in line with the surprise, rising 3 cents to $0.58. The Zacks Consensus Estimate for 2012 is up 5 cents, to $0.69.
In 2010 TransAct made $0.41 per share, putting expected EPS growth rates at 41% for this year and another 19% next year.
Shares of TACT are going for just 11 times this year's estimates, which leaves the PEG ratio at just 0.4. Its price to sales ratio at 0.9 times and the stock is going for 1.9 times book value.
TACT has been decimated over the past few months, which has led to those dirt-cheap valuations. But, if you can stomach the risk this one could bounce right back given the rising earnings expectations.
Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service