All throughout the Motley Fool Hidden Gems community today, investors are training their sights on little laser-maker Rofin-Sinar (NASDAQ:RSTI), which reports its fourth-quarter and full-year fiscal 2005 earnings Thursday afternoon, after the close of trading on Wall Street.
So far, it's been a steady-as-she-goes year for Rofin-Sinar, a stock that joined our portfolio just a little more than a year ago -- and has returned 22.75% over the S&P to Hidden Gems subscribers who bought it back then. Although the company's free cash flow generation has been all over the map this year, its earnings -- according to generally accepted accounting principles -- haven't deviated in any given quarter by more than a penny ($0.55, $0.56, $0.54) from a $0.55 per-diluted-share average. But the lone analyst positing earnings numbers for the company predicts that Rofin-Sinar will lift off from its earnings plateau tomorrow and report a slight sequential uptick to $0.59 per share for its fiscal fourth quarter.
The company will have to do even better than that, though, if it's to satisfy the other three analysts who follow Rofin-Sinar. Combined, the consensus of all four analysts is that the company must either hit $2.36 for the fiscal year or admit to "missing earnings." If Rofin-Sinar reports only $0.59 per share, therefore, it will fall $0.12 shy of the mark, and its shares may suffer as a result.
Regardless of how the stock fares when subjected to Wall Street's expectations game tomorrow, by all accounts the business has been doing pretty well this year. As we learned in the last quarterly report, Rofin-Sinar grew revenues by an impressive 20% and profits per diluted share by 22% through the first nine months of this year, in comparison with the equivalent year-ago period. The company kept its inventories in check; it grew them at a slower rate than sales (14%) and managed its collections even more effectively, allowing accounts receivable to increase less than 1%.
If the company shows us tomorrow that it's been able to maintain that performance through the fourth quarter, Foolish investors will have reason to be pleased, whether the analysts are or not.
Rofin-Sinar is an official recommendation of the Motley Fool Hidden Gems newsletter, where we don't just recommend a stock and forget about it. We constantly monitor each and every one of our recommendations and update you on major developments through articles on Fool.com, and in mid-month and semi-annual reviews in our newsletter. Take a free trial right now, and you'll get access to all of our past recommendations, plus mid-month updates and six-month reviews for everything we've ever recommended. That's 28 months of extra Foolish wisdom at no extra charge.
Fool contributor Rich Smith does not own shares in either company named above.
