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Shares of Mobile Mini, Inc. (MINI - Free Report) have been moving forward for a while and hit a 52-week high on Jan 18. This Zacks Rank #1 (Strong Buy) provider of portable storage solutions delivered a 31.82% earnings surprise in its third quarter.

There are several reasons why MINI could be attractive to growth investors, including its expected long-term earnings growth of 14%, its strong market leadership position, geographic expansion opportunities and its focus on the core portable storage leasing business with predictable recurring revenue and high margins.

A Solid Q3

On Nov 7, Mobile Mini reported third-quarter 2012 earnings of 29 cents per share, marking a 38% increase from last year and a 31.8% surprise above the Zacks Consensus Estimate. In terms of the third quarter earnings growth and surprise, Mobile Mini outshone its peers Crown Holdings Inc. (CCK), Silgan Holdings Inc. (SLGN) and Ball Corporation (BLL).

Revenues rose 6% year over year to $100.9 million, ahead of the Zacks Consensus Estimate of $98 million. Leasing revenues (90% of total revenues) increased 9.7% to $90.7 million, which was the highest level since the fourth quarter of 2008 and the seventh consecutive quarter with increased leasing revenues.

On the profitability front, adjusted operating profit increased 12% to $29 million with operating margin expanding 150 basis points to 28.9%. Adjusted EBITDA (Earnings before interest, tax, depreciation and amortization) was $38.1 million, up 8.8% from the year ago quarter. Aided by operating leverage, adjusted EBITDA margin increased to 37.8% from 36.8% in the year ago quarter, improving for the first time since 2009.

Mobile Mini recently announced the exit of CEO Steven Bunger, and said that the search is on for a fitting successor.

Earnings Estimates on the Rise

The Zacks Consensus Estimate for 2012 has moved up roughly 11% in the last 90 days to 89 cents per share, representing a year-over-year growth of around 16.67%. For 2013, the Zacks Consensus Estimate rose roughly 5% over the same period to $1.17 per share, indicating an estimated growth of 31.58%.

Valuation: Stretched but Justified

Mobile Mini is currently trading at a forward P/E of 19.73x, a 42% premium to the peer group average of 13.85x. Its trailing twelve months P/E of 27.73x is above the peer group average of 16.09x. The price-to-sales of 2.78x is well above the peer group average of 0.83x. The premium valuation is justified given the strong earnings trajectory.

Mobile Mini is currently trading above its 50- and 200-day moving averages, which stand at $20.72 and $17.30, respectively. Notably, following a golden crossover in mid-Nov 2012, the 50-day moving average continues to read higher than the 200-day moving average, manifesting the bullish trend.

Mobile Mini, which has a market cap of roughly $1.03 billion, is a leading provider of portable storage solutions. The company derives the major portion of its revenues from the leasing of portable storage containers, security office units and mobile office units. The company boasts a total lease fleet of approximately 235,000 units with 136 locations encompassing the U.S., United Kingdom, Canada and The Netherlands. The company offers its customers an array of portable storage and office products in varying lengths and widths with differentiated features such as patented locking systems, premium doors, electrical wiring and shelving.

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