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 Polypore International (PPO) jumped 15% today after reporting earnings.
So what: First quarter revenue was up 10% to $161.0 million and adjusted net income rose 36% to $13.6 million, or $0.30 per share. Results were actually short of analyst estimates, but a new contract with Panasonic overshadowed that.
A new deal with Panasonic is a five-year agreement to purchase Celgard-brand separators for electric vehicle lithium-ion batteries. It includes minimum volume requirements, although details weren't given.
Now what: Panasonic is one of the leading battery suppliers to the EV market, including being a key supplier to Tesla Motors. The contract win means Polypore can grow along with Panasonic in this emerging market and have some stability with the volume guarantees. I think this is a big move for Polypore and shares are becoming attractive at 20 times next year's estimates.
