Sticking SonoSite (NASDAQ:SONO) under one of its own MicroMaxx handheld-ultrasound machines would reveal two different companies. Stateside revenue for its most recent quarter rose just 5% over the prior year's comparable quarter. Overseas, the top line soared 41%.
With domestic revenue now making up just 51% of total revenue, the international boost can have a dramatic impact. For this particular quarter, which ended in December, it translated into a 20% revenue growth spurt. Earnings inched up slightly, to $0.34 a share after a $0.32-per-share showing a year earlier.
Because SonoSite's international sales are generated through third-party distributors, margins are leaner overseas. Offsetting that is the company's commitment to reduce corporate overhead as a percentage of revenue and to introduce a flurry of new products over the next 18 months.
This is a competitive market, but SonoSite is holding its own. Yes, you can compete against the mighty General Electric (NYSE:GE) and win.
Growth actually accelerated throughout 2006. After growing its top line by 13% through the first half of the year and by 16% in the third quarter, the 20% uptick in the fourth quarter is impressive.
The company says it is looking for 2007 revenues to climb "at least 15%". Operating income is projected to double. Nice!
The deluge of new introductions will probably happen toward the end of the year or early in 2008. That may not have an impact on this year's numbers, but it may keep sales growth accelerating over the next two years.
SonoSite is a Rule Breakers newsletter recommendation. Sure, the company's handheld ultrasound equipment may not seem as exciting as fellow stock pick Intuitive Surgical (NASDAQ:ISRG) with its da Vinci surgical robotic products, but the company's flagship MicroMaxx product is clearly a global winner.
With the company's huge gains in overseas markets, SonoSite may not save the world -- but the world may save SonoSite.
Feel like a Rule Breaker now, do you? Check out David Gardner's growth stock newsletter as part of a free 30-day trial subscription to see whether cool stocks like SonoSite and Intuitive Surgical belong in your portfolio.
Longtime Fool contributor Rick Munarriz has seen a few ultrasound sessions take place, but they have all been of the larger, old-school variety. He does not own shares in any of the companies mentioned in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
