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What happened

It was great news all around for Cambrex Corporation (NYSE:CBM), manufacturer of small-molecule and generic active pharmaceutical ingredients, during the third quarter of 2016. The company announced solid results on both the top and bottom lines, and nudged its full-year guidance higher.

So what

Cambrex Corporation avoids the risks of binary outcomes for clinical trials and the regulatory process by manufacturing the active ingredients that allow pharmaceuticals to function. It has seen amazing growth in recent years by piggybacking on trends within the industry -- cost-cutting, strict regulations for manufacturing certain ingredients, and new bioprocess technologies -- and investing wisely to stay at the top of its field. Revenue grew 56.7% from 2012 to 2015, while operating income more than doubled during that period. The strong performance has pushed the company's stock up over 700% in the last five years. But management doesn't think the growth is ending anytime soon.

For the third quarter of 2016 compared to the year-ago period, revenue jumped 8% to $99.9 million, earnings per share rose 17% to $0.42, and operating profit increased 8% to $19.5 million. The company also added $38.3 million to its cash position from the end of the second quarter, an increase of 73%. That will help bolster operations, especially with the announcement of major investments at each of its three manufacturing sites aimed at increasing production capacity, flexibility, and efficiency.

The strong quarter allowed management to increase its full-year 2016 outlook, too. Here are the important metrics:


New Guidance

Previous Guidance

Revenue growth

12% to 14%

10% to 13%

Free cash flow

$65 million to $75 million

$60 million to $70 million

Capital expenditures

$67 million to $72 million

$70 million to $75 million

Data source: Cambrex press release.

The new range for revenue growth would place full-year sales between $485 million and $494 million, nearly double 2011 levels.

Now what

Cambrex Corporation has been quietly executing against its long-term goals and delivering excellent gains to shareholders for many years now. Better yet, the company is well positioned to capitalize on trends within the pharmaceutical industry for the foreseeable future. Maybe today's pop will force more investors to take notice.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.