High-tech potter Ceradyne's (NASDAQ:CRDN) earnings reports are a work of art. In April, the company extended its streak of beating analyst estimates to 19 straight quarters. So does anyone want to bet that this ceramics specialist can't pull an even 20 out of the kiln when it reports Q2 2007 numbers on Tuesday?

What analysts say:

  • Buy, sell, or waffle? Ceradyne is finally getting some respect on Wall Street, with two analysts adding it to their coverage lists since last quarter. That makes 10 in all, with four saying to buy it, five to hold it, and one to sell.
  • Revenue. On average, they're looking for 16% sales growth to $187.5 million.
  • Earnings. Profits are predicted to rise 24% to $1.36 per share.

What management says:
The big news at Ceradyne this quarter was certainly the firm's entry into the MRAP race with its BULL vehicle armor package. (Or is it a vehicle itself?) Investors betting that General Dynamics (NYSE:GD), Oshkosh (NYSE:OSK), Force Protection (NASDAQ:FRPT), and Armor Holdings (NYSE:AH) would get to keep the military's MRAP contracts to themselves were sorely disappointed by the news. But as the share-price rise demonstrates, Ceradyne investors have been heartened by the news that this firm's military revenue streams aren't going away any time soon.

What management does:
More importantly, the more this company innovates and retains a leading position in the defense sphere, the longer it will be able to keep posting margin expansion like this:

Margins

12/05

3/06

6/06

9/06

12/06

3/07

Gross

35.6%

37.5%

38.3%

38.5%

39.4%

39.7%

Operating

22.2%

25.3%

27.0%

28.2%

29.7%

30.2%

Net

12.7%

15.0%

16.4%

17.8%

19.4%

19.8%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Ceradyne isn't keeping its eggs all in one Army rucksack, though. Reviewing recent announcements, we see it taking additional steps to capitalize on the burgeoning market for silicon-based solar cells. Two weeks ago, Ceradyne picked up "fused silica powders" manufacturer Minco for less than $30 million -- less than 1.5 times sales (Ceradyne stock fetches more than twice that price). Late last month, it shelled out $69 million to acquire Oklahoma's EaglePicher Boron LLC. The valuation there was close to Ceradyne's own, but not exceeding it. More importantly, EaglePicher brings with it products that are not just complimentary to Ceradyne's solar power efforts, but also especially useful in manufacturing nuclear power plants and nuclear waste containment facilities -- another growth area for the company.

Long story short, I don't see Ceradyne's growth story ending any time soon. Nor does management, it seems.

Want to learn more about the company? Read all about why we're BULL-ish on Ceradyne.

Ceradyne isn't a recommendation of Motley Fool Rule Breakers, but other solar power-related companies are. Find out who we like even better than Ceradyne when you claim a free 30-day trial to the service. Force Protection is a pick, for one.

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.