Sauer-Danfoss Shares Popped: What You Need to Know (SHS)

Sauer-Danfoss Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Sauer-Danfoss (NYSE: SHS ) , which manufactures mobile hydraulic systems, surged more than 25% in intraday trading Thursday after its quarterly results and full-year forecast blew out Wall Street expectations.

So what: Fueled by a 54% spike in revenue, Sauer-Danfoss swung to a fourth-quarter profit of $126.02 million, or $2.60 per share, compared to a loss of $74.73 million, or $1.55 per share, in the year-ago period. The company has been benefitting from rebounding demand in all three of its regions, with sales increasing 53% in the Americas, 42% in Europe, and doubling in Asia-Pacific.

Now what: Don't let today's massive rally scare you away from Sauer-Danfoss. Thanks to surging orders and backlogs, the company now sees full-year earnings of $3-$4 per share on top-line growth of 10%-20%. The stock might be surging today, but when you consider that it's still trading at a forward P/E of less than 11(using the midpoint of management's profit guidance), Sauer-Danfoss still seems like a reasonable opportunity.

Interested in more info on Sauer-Danfoss? Add it to your watchlist.

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Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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