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 Cray (CRAY) jumped more than 17% early Thursday after the supercomputing specialist announced one of the largest contracts in its history.
So what: Specifically, Cray just secured a $174 million deal to provide the National Nuclear Security Administration with both a next-gen Cray XC supercomputer and a Cray Sonexion storage system. The XC system, Cray elaborates, will be named "Trinity" and is being implemented to advance the mission for the agency's stockpile stewardship program. The Trinity system is also expected to provide more than eight times greater applications performance than the NNSA's current supercomputer at Los Alamos -- which is a Cray XE6 system named "Cielo" -- and will support all three of the NNSA national labs, including the Los Alamos National Laboratory, Sandia National Laboratories, and the Lawrence Livermore National Laboratory.
Now what: Note revenue from the multiyear, multiphase deal won't be recognized all at once. Rather, Cray expects "substantial system acceptances" to occur in late 2015 and 2016. Even so, this is a big win for Cray, shares of which were still reeling after the company issued cautious full-year 2014 guidance back in April. With shares of Cray still trading around at 46 and 31 times trailing and forward earnings, respectively, I'm personally still content watching from the sidelines. But for long-term investors who've already opened a position, today's news rightly serves as a massive vote of confidence in their company's future.
