Please ensure Javascript is enabled for purposes of website accessibility

Why Hollysys Automation Technologies, Ltd. Shares Popped

By Steve Symington - Feb 18, 2014 at 10:26PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is Hollysys' jump meaningful? Or just another movement?

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 Hollysys Automation Technologies, Ltd. (HOLI 2.58%) jumped more than 10% during Tuesday's intraday trading, then settled to close up around 5% after the company turned in encouraging fiscal second quarter 2014 results.

So what: Quarterly revenue rose 75.9% year-over-year to $153.4 million, which translated to adjusted net income growth of 87.5% to $0.45 per share. By contrast, analysts were only expecting earnings of $0.27 per share on sales of $114.33 million. 

Now what: Going forward, Hollysys management also increased both the top and bottom ends of their fiscal year 2014 revenue guidance by $40 million to $500 million to $530 million. Analysts were only modeling fiscal 2014 revenue of $479.67 million.

In addition, Hollysys increased its 2014 net income guidance to a range of $84 million to $86 million, up from the previous range of $65 million to $69 million. 

As a result -- and putting aside the fact Hollysys has minimal debt and roughly $135 million in cash on its balance sheet -- shares look cheap trading at just 12.7 times this year's expected earnings. Even after today's pop, that's why I think Hollysys should still stand to reward patient long-term investors.

Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Hollysys Automation Technologies Ltd. Stock Quote
Hollysys Automation Technologies Ltd.
$15.49 (2.58%) $0.39

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/12/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.