Commercial Vehicle Group (CVGI – Snapshot Report) absolutely crushed the Zacks Consensus Estimate and is now benefiting from the “post earnings drift” higher. The stock is a Zacks Rank #1 (Strong Buy) and today it is the Bull of the Day.
CVGI beat the Zacks Consensus Estimate of a loss of $0.09 by $0.19 for a 211% positive earnings surprise. The topline was equally as strong with the company reporting revenues of $180M and that was $15M more than expected for a 9% positive revenue surprise.
As a result of the great performance Wall Street sent shares of CVGI higher by more than 19% in the session following the release.
Commercial Vehicle Group sells various cab related products and systems for Trucks and busses Commercial Vehicle Group, Inc. was founded in 2000 and is headquartered in New Albany, Ohio.
The most recent beat was nice, not just because of its size but also because it ended a streak of three straight misses. The company had not topped the Zacks Consensus Estimate since the March 2015 quarter when an eight cent beat was good for a positive earnings surprise of 160%.
The thing about a huge beat like the most recent one is that it can really change the outlook. The Zacks Consensus Estimate was calling for a loss of $0.16 in April, but following the beat the number flipped to a gain, and a big one at that. We are now looking for a $0.13 gain and that is a huge $0.29 move.
The 2017 Zacks Consensus Estimate flipped from a loss of $.011 to a gain of $0.15. Again, another big move there too, and that comes with even less visibility.
The valuation is a little stiff for CVGI. 37x forward PE is sort of big especially when the industry average is only 9.5x. The price to book multiple of 2.1x is just a little ahead of the 1.7x industry average. The price to sales multiple is the only stat that I tend to look at that shows this stock trading at a discount. CVGI trades at 0.2x price to sales multiple, while the industry average is 0.6x.
Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #1 (Strong Buy) we see that estimates are moving higher.
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Brian Bolan is a Stock Strategist for Zacks.com. He is the Editor in charge of theZacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.
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