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Strong Buy on Littelfuse Inc.

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On Jun 5, Zacks Investment Research upgraded Littelfuse Inc. (LFUS - Free Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Littelfuse Inc. has been witnessing rising earnings estimates after its earnings beat in the first quarter of 2013. This electrical equipment manufacturer delivered positive earnings surprises in 8 of the last 10 quarters with an average beat of 4.8%.

Littelfuse Inc.’s first quarter earnings per share came in at 95 cents, surpassing the Zacks Consensus Estimate by 14.5%. The results benefited from strong performances across its operating segments. Automotive registered a 13% y-o-y improvement in sales, the most impressive among the three segments. A solid performance from passenger vehicle business and acquisitions of Accel and Terra boosted the segment.

The book-to-bill ratio at the end of the first quarter 2013 was 1.18, improving 1.7% year over year, indicating consistently strong demand for its products. In addition, total expenses, as a percentage of total revenue, declined 50 basis points in the reported quarter, benefiting margins.

In May 2013, Littelfuse completed its previously announced acquisition of Hamlin, Inc. from Key Safety Systems for $145 million. This acquisition will help the company to build a global sensor platform. We believe that the company’s strong financial position has helped it to make strategic acquisitions, which in turn strengthen operations and widen markets.

The Zacks Consensus Estimate for 2013 increased 5.8% to $4.18 per share as 3 out of 5 estimates were revised higher over the last 60 days. For 2014, 3 out of 5 estimates moved north over the same time frame, lifting the Zacks Consensus Estimate by 6.1% to $4.68 per share.

Other Stocks to Consider

Besides Littelfuse Inc. other operators in the industry with a favorable Zacks Rank are LightPath Technologies Inc. (LPTH - Free Report) , Maxwell Technologies Inc. (MXWL - Free Report) and Stoneridge Inc. (SRI - Free Report) . All these companies presently carry a Zacks Rank # 1 (Strong Buy).

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