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Sutor Technology: A Strong Buy
Zacks Investment Research upgraded
Sutor Technology Group Limited to a Zacks Rank #1 (Strong Buy) on Jul 11, 2013.
Why the Upgrade?
Sutor Technology posted impressive financial results for the third quarter of fiscal 2013 (ended Mar 31, 2013) on May 13. Earnings per share in the quarter came in at 10 cents, up from just 3 cents earned in the year-ago quarter and double the Zacks Consensus Estimate of 5 cents per share.
Revenue increased 27.0% year over year to $139.6 million in the quarter. Sales volume was up 54% while average selling prices were down 22%. Domestic sales rose 25% while international sales increased 56%.
Increase in proportion of high-margin products in the quarter pushed gross margin up by 60 basis points (bps). Total operating expenses, as a percentage of revenue, went down by 10 basis points to 2.8%. Operating margin stood at 5.0% versus 4.3% in the year-ago quarter.
Sutor Technology had positive earnings surprise in three out of four trailing quarters, the average being 100.0%. This combined with the third quarter results has raised optimism for a better financial performance ahead. Also, in the last 60 days, the Zacks Consensus Estimate for fiscal 2013 has gone up by 16.1% to 36 cents while that for fiscal 2014 went up 7.1% to 45 cents. Other Stocks to Consider:
Sutor Technology is one of the leading manufacturers and suppliers of steel products in China. The company currently has a market capitalization of $60.8 million. Other stocks worth a look at in the industry are RTI International Metals, Inc. , with a Zacks Rank #1 (Strong Buy), Carpenter Technology Corp. ( CRS - Snapshot Report) and Material Sciences Corporation .