Bull Of The Day: Electro Scientific (ESIO)

Electro Scientific Industries (ESIO) is a Zacks Rank #2 (Buy) which is a little head scratching to me because I believe it should be a Zacks Rank #1 (Strong Buy).  Let's take a look at the most recent quarters and how estimates moved since then and try to reconcile how this stock isn't the best Rank.

Most Recent Earnings Report

I have to admit this most recent earnings report was among the strongest reports I have seen in the last few years.  As strong as the beat was, the guidance was so strong that I had to check a few sources when I first saw it because I thought it had to be an error. I mean when was the last time you saw a company project sales that were double what Wall Street was looking for?

Let's get to the numbers so you can see why I am so excited about this stock. The company reported EPS of $0.39 when $0.28 was where the Zacks Consensus Estimate was at.  Revenues were just about $71M when $65.5M were expected.

Guidance is the real story here.  Maybe the analysts covering the stock should have been a bit more aggressive with their models, but hindsight is always 20/20.  

The company sees EPS of $0.48 to $0.60 and that is basically lightyears ahead of the $0.02 that was expected.  Maybe a lightyear is exactly 24x at the low end and 30x at the high end, but in terms of EPS growth, it kind of is.  

Revenues are expected to be $80M to $90M and at the top end that is more than double the $44.5M expectation. 

Estimate Revisions

In some ways, this article should end right here, but let's look at what has happened to earnings estimates. The revisions to earnings estimates are the basis of the Zacks Rank, and the moves here are impressive. 

This quarter has moved from $0.00 to $0.55 in the last 30 days.  Next quarter has moved from $0.14 to $0.50 over the same time period.

This year has increased by $1.02 from $0.80 and is now $1.82.  Next year is a little foggy still and estimates are at $1.25, up from $0.95.

Shameless Self-Promotion

I am going to conclude this article with some shameless self-promotion.  I was watching this stock for some time and I pulled the trigger on it prior to the earnings report for Home Run Investor.  I manage Home Run Investor which looks for small and mid cap stocks that have solid increases in earnings estimates (a high Zacks Rank) and great potential.  So, yes, subscribers were buying this stock below $17 and they are looking at a stock that is up $10 per share in just a month or so.

https://twitter.com/bbolan1/status/925869286811488256

The link above is to my twitter feed, in which I try to promote the Home Run Investor service.  I have told subscribers that I thought the stock is worth more than $30 -- and there is still plenty of meat on that bone.

Chart

 

Electro Scientific Industries, Inc. Price and Consensus

Electro Scientific Industries, Inc. Price and Consensus | Electro Scientific Industries, Inc. Quote

 

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