CARBO Ceramics, Inc. - Momentum

CARBO Ceramics, Inc. (CRR) is once again pressuring its all-time high after reporting another great quarter in late July that included a 27% earnings surprise. With a next-year estimate of 21%, the longer-term picture looks good too.

Second-Quarter Results

Revenue for the period was up 61% from last year to $112 million. Earnings also came in strong at 81 cents per share, 27% ahead of the Zacks Consensus Estimate. In spite of one small miss two quarters ago, the company now has an average earnings surprise of 25% over the last four quarters.

As sales continue to grow at a brisk pace, CARBO's biggest challenge has been keeping pace with demand, a problem many companies would love to have. On that front, CARBO noted that a third line at its facility in Toomsboro, Georgia, with production capabilities of 250 million pounds of ceramic proppant, is on schedule for completion in November. ANother line is scheduled for completion in 2011, with the two new lines expected to increase production capacities by 40%.

Balance Sheet

Although CARBO's cash position is down about $20 from last year to $73 million, it has a pristine balance sheet, with no long-term debt against the industry's 22.5% average debt-to-equity ratio.

Estimates

Estimates took a nice jump on the good quarter, with the current year up 34 cents since the release to $3.16. The next-year estimate is up 32 cents in the same time to $3.82, a 21% growth projection.

Valuation

With a PEG ratio (PE/Growth) of 1.0, shares of CRR look reasonably priced to go along with some very solid upward momentum.

2-Year Chart

CRR is once again pressuring the all-time high after rebounding from a key long-term trend line in late August. The MACD below the chart is bullish too, with the short-term average crossing ahead of the long-term average. Take a look below.

Read the July 9 CRR article here

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the new Zacks Momentum Trader Service.
 
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