51jobs, Inc. - Momentum

51jobs, Inc. (JOBS) recently jumped to a new all-time high after reporting another solid quarter that included a 25% earnings surprise. With estimates on the rise and analysts looking for 38% earnings growth in 2011, this Zacks #1 rank stock offers an international twist to the momentum cocktail.

In case anyone's forgotten, 51jobs is an employment services company out of China with a market cap of $1.4 billion. The company is a play on the booming chinese economy, on full display with 51job's strong Q3 results from early November that easily beat expectations.

Third-Quarter Results

Revenue for period was up 24% from last year to $41 million. Earnings also looked good, coming in at 33 cents, 10% ahead of the Zacks Consensus Estimate, where the company now has an average earnings surprise of 28% over the last four quarters.

The solid results were driven by the company's largest segment, online services, where revenue was up 58% from last year to $21.3 million.

Margins were also on the upswing, with gross margin expanding to 68.4% from 62.4% last year

Strong Cash Position

With this high-margin business scooping up big revenue gains, the extra cash has been hitting the balance sheet, with cash and equivilants up to $226 million.

Estimates

The good quarter pushed estimates higher, with the current year gaining 4 cents to $1.20 and the next year adding 16 cents to $1.59, a bullish 33% growth projection.

Valuation

But in spite of the recent gains, JOBS still looks reasoably priced, trading with a PEG Ratio (PE/Growth) 1, a benchmark for value.

12-Month Chart

On the chart, JOBS has been jumping higher since July, more than doubling in price after recently topping off above, ironically, $51. Look for support from the longer-term trend on any weakness, take a look below.

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Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service.
 
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