Over the past year or so, Ceradyne (NASDAQ:CRDN) has been one of those rare stocks that's done pretty much what I thought it would, when I thought it would, making me feel cleverer than I am. So be it. Today, the ceramics specialist, which competes in some product lines with Armor Holdings (NYSE:AH) and has a somewhat symbiotic relationship with soft vest provider DHB Industries (AMEX:DHB), made a lot of shareholders feel clever.

The firm not only jumped the high bar that my colleague Rich Smith described earlier this week, but also smacked its head on the rafters. For the quarter, the firm put up earnings per share of $0.63, which was more than the $0.59 per share that analysts expected to see. That even included a $0.07 one-time charge for debt retirement. Call it a $0.11 boo-yah.

For the quarter, margins rose across the board, including an incredible 7.16-percentage-point gain in operating margin for the quarter. For the full year, that margin expansion was also in force, with operating margins jumping two percentage points. The net margin dropped nine basis points, which owed a lot to that debt retirement, as well as some higher interest costs during the year. The full tally was $1.86 a share, or 66% more than last year, on a 70.8% increase in revenues.

I'm going to yadda-yadda the rest of the details, because, as nice as they were, they don't really matter.

With a stock priced like this one, investors ought to be wondering what's coming next. If you can trust the numbers of a management team that's consistently underguessed its actual results, 2006 will be more of the same. Previously, management predicted 2006 sales of $440 million-$465 million, with earnings in a range of $2.43 to $2.52 per share. Today, management updated this to $535 million-$565 million on the top line, with earnings of $3.00 to $3.23 per share. Taking the middle of those ranges, that's a full 25% increase in the guidance for earnings, which would represent a 67% earnings increase for the year.

And that guidance is probably too low. Here's why.

It reflects some recent orders but relies only on those the company considers secure. To get an idea of what management figures to be safe for inclusion in guidance, consider that this guidance excludes the large and (very likely) contribution from the huge side-plate contract that was just released by the military. Since Ceradyne has more than 60% of the ceramic-body-armor plate business already, and a recent rush side-plate order was given to Ceradyne on a no-bid basis because it's the go-to company in this sector, well, I'm pretty confident that management will be upgrading this guidance in short order.

And at the risk of waving my pom-poms too much (sorry, I like this company), I'll also point out that Ceradyne's vigorously pursuing greater opportunities in industrial markets, like crucibles used in the solar cell biz and wear components for the oil patch. Oh, and did I mention the fireworks if the company's efforts in vehicle armor pan out?

Ceradyne's stock may not look cheap. But with as many surprises as it's continued to offer, I've got no butterflies about continuing to hold. Others may think this has run up as far as it can go. I think we're a long way from seeing the top of the hill.

Seth Jayson hopes to dive the Ceradyne trash bins someday for a souvenir reject plate. At the time of publication, he had shares of Ceradyne but no positions in any other firm mentioned. View his stock holdings and Fool profile here. Fool rules are here.