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Sun Hydraulics (SNHY) Hits New 52-Week High: Here's Why

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Shares of Sun Hydraulics Corporation (SNHY - Free Report) scaled a new 52-week high of $51.05 during its trading session on Sep 6. This improved upon the last 52-week high of $48.44 recorded on Aug 8.

On Sep 6, Sun Hydraulics closed its trading session at $50.67. The trading volume for the session was approximately 0.35 million shares.

Year to date, shares of the company have yielded 26.8% return, outperforming 12.6% growth of the industry it belongs to.

Notably, Sun Hydraulics' shares have rallied 16.9% since the company reported impressive second-quarter 2017 results on Aug 7. Its profitability improved on the back of healthy sales growth in the Hydraulics and Electronics business segments. Sales at Electronics were primarily driven by benefits from the Enovation Controls business, which was acquired in December 2016.

Growth Drivers

In the quarters ahead, Sun Hydraulics anticipates benefiting from its existing product portfolio, new product launches, improving operational efficiency and promotional activities. Also, the company intends to develop a new manufacturing facility in South Korea, for satisfying the local needs more effectively. Per its Vision 2025 plan, the company aims to generate more than $1 billion in revenues and achieve high profitability.

Solid 2017 Guidance

Anticipating continuance of favorable operating conditions throughout 2017, Sun Hydraulics increased its revenue guidance to a range of $315-$330 million from $295-$310 million projected previously. On a segmental basis, Hydraulics revenues will likely come in within $215-$225 million, up from $205-$215 million expected earlier. Revenues from Electronics will likely be $100-$105 million versus the prior expectation of $90-$95 million. The company has also raised its operating margin expectation to 22-24% from 20-22%. Capital spending has been raised from $8-$10 million to $20-$25 million.

Positive Revision in Earnings Estimates

We believe that positive earnings estimate revisions for 2017 and 2018 indicate Sun Hydraulics’ potential for further price appreciation.

Over the last 60 days, the stock’s Zacks Consensus Estimate grew 14.8% to $1.55 for 2017 and 12.9% to $1.75 for 2018. Likewise, earnings estimates for third-quarter 2017 grew 13.3% to 34 cents.

Sun Hydraulics Corporation Price and Consensus
 

Zacks Rank & Stocks to Consider

Sun Hydraulics currently has $1.4 billion market capitalization and sports a Zacks Rank #1 (Strong Buy). Other stocks worth considering in the same space include EnPro Industries (NPO - Free Report) , Kadant Inc. (KAI - Free Report) and Altra Industrial Motion Corporation (AIMC - Free Report) . While both EnPro Industries and Kadant sport a Zacks Rank #1, Altra Industrial Motion carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

EnPro Industries’ earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, its earnings are anticipated to grow 15.9% in the next three to five years.

Kadant’s average earnings surprise for the last four quarters was a positive 19.29%. Also, earnings expectations for 2017 and 2018 improved over the past 60 days.

Altra Industrial Motion’s earnings estimates for 2017 and 2018 were revised upward in the last 60 days. Also, the company pulled off an average positive earnings surprise of 16.95% for the last four quarters.

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