Micro-cap stocks are always an interesting investment to be holding come earnings time because they rarely have more than a handful of Wall Street analysts covering the stock. This often leads to large earnings beats or misses that you just don't see with more widely followed stocks. Last night, one such micro cap took a mallet and beat Wall Street over the head with its own forward guidance.
Based on the three analyst estimates found on Yahoo! Finance, FSI was expected to report a second-quarter profit of $0.05 on sales of $32.1 million. FSI actually reported a profit of $0.09 on sales of $38.5 million. New orders increased a whopping 123% to $51.4 million over the year-ago period with total first-half sales up by 24%.
For those of you who think this was merely FSI pushing sales from what was a weak first quarter into the second quarter and padding its results, think again! The truly exceptional aspect of FSI's report was its third-quarter guidance.
Although the company doesn't give specifics, it did allude to sales in excess of $50 million for the quarter (keep in mind it just reported $38.5 million in the second quarter, so we're talking a sequential increase of 30%) and net income of $7 million to $9 million, or $0.18-$0.23 per share. Where were Wall Street's estimates for Q3? How about $36.3 million in sales and $0.13 in EPS!
Take that, Wall Street! The company sees strong backlog and order placement and steady growth in product acceptance as the reasons for the bullish forecast.
FSI isn't alone, however, with regards to strength in semiconductor equipment sales. Just last month, Applied Materials
A high level of demand for semiconductor equipment and services from fabless semi companies seems to be the primary reason for the sectorwide boost. And this fabless semi demand can be directly attributed to consumers' willingness to wait in line for six hours to buy the latest smartphone and tablet. Apple's
Whether it's Apple-related or not, FSI International is enjoying the bump in orders and the cash flow being generated from its latest growth spurt. The company ended the quarter with $23.8 million in cash, no debt, and trades for just under two times book value. With earnings estimates almost assured to head higher, it's quite conceivable that FSI's run is just beginning.
Do you think there's still gas in FSI's tank? Let me and your fellow Fools know in the comments section below and consider adding FSI International to your free and personalized watchlist.
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. He will be buying a 4S when his two-year contract is up in June (or waiting for the iPhone 5). You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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