Gardner Denver, Inc. - Momentum

Gardner Denver, Inc. (GDI) has been surging with the market since early September, recently hitting a new all-time high at $70.03 on the heels of a solid 21%, Q3 earnings surprise. With an attractive valuation and bullish growth projection, this Zacks #1 rank stock has engineered some serious momentum for itself.

Company Description

Gardner Denver, Inc. designs, manufactures and sells engineered industrial machinery and related parts worldwide. The company has been in business since 1859 and has a market cap of $3.65 billion.

With demand returning to Gardner Denver's end markets over the last year on a strong global economy, it has been scoring record revenues and profits. That dynamic showed up in late October when the company reported strong Q3 results that handily beat expectations.

Third-Quarter Results

Revenue for the period was up 15% from last year to $493. Earnings also came in strong at 88 cents, 21% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 14% over the last four quarters.

The good quarter was driven by the company's largest segment, Engineered Products, which saw revenue increase 25% from last year to $213 million.

Expenses were also well contained, with selling and admin expenses dipping to 18.5% of revenue from 21% last year.

Balance Sheet

On the back of the company's strong momentum over the last 18 months, its balance sheet has been on the upswing, with cash and equivalents up $57 million from last year to $167 million while its debt load fell $112 million to $306 million.

Estimates

We saw some pretty solid movement in estimates off the good quarter, with the current year adding 31 cents to $3.27 and the next-year estimate adding 49 cents to $3.96, a bullish 21% growth projection.

Valuation

But in spite of the gains, GDI still has an attractive valuation, trading with a PEG ratio (PE/Growth) of 1, a standard benchmark for value.

12-Month Chart

On the chart, GDI has been ripping higher since early September, recently hitting a new multi-year high at $70.03. The MACD below the chart is bullish too, with the short-term average trending ahead of the long-term average. Look for support from the long-term trend line on any weakness, take a look below.

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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