So how did the little guy do? Pretty well, actually. First, Natus hit the top of its revenue target, increasing its sales by 18% to reach an even $9 million on the back of a 70% increase in international sales. The company couldn't quite push its gross margins over the 60% mark, making it only as high as 57.1%. But Natus made up for that by doing even better than I had anticipated in slashing its operating costs -- it got them down to just $4.7 million. As a result, Natus still delivered on its promise of at least $0.03 in earnings from continuing operations.
Year-to-date, the results remain more mixed. Revenues rose 21% in comparison with the year-ago period. Meanwhile, the company's GAAP loss widened from last year's $0.19 to this year's $0.23.
As for next quarter, Natus projects a continued trend onward and upward. It bumped its revenue estimates up to $10 to $10.3 million, while holding its profits prediction steady at $0.07 to $0.09 per share (creating the possibility of an end-of-year "earnings surprise"). And for the year to come, Natus expects revenues of from $41 million to $43 million to translate into diluted per-share profits of $0.26 to $0.28.
Valuation-wise, that would give Natus a forward P/E of 26 (I'd work an EV/FCF for you, but Natus remains free cash flow-negative). Even with its stock trading at just $7 a stub, that seems a bit pricey. If your appetite for risk can stomach an even smaller-fry competitor of Natus, though, you may find a better bargain in tiny Bio-Logic Systems
Take a free trial today to Motley Fool Hidden Gems for continuing coverage on lots of small, undervalued and underfollowed companies.
Fool contributor Rich Smith owns no interest in either of the companies mentioned in this article.