Faro Technologies (FARO – Snapshot Report) develops and markets portable CMMs (coordinate measuring machines) and 3D imaging devices to solve dimensional metrology problems. Technology from FARO permits high-precision 3D measurement, imaging and comparison of parts and compound structures within production and quality assurance processes. FARO’s product line includes portable, 3D measurement equipment, computer-aided design-based inspection software for portable and fixed-base coordinate measurement machines, as well as factory-level statistical process control, and manufacturing quality consulting services.The stock is the Bear of the Day after being downgraded to a Zacks Rank #5 (Strong Sell) and after poor earnings earlier in the month.
Faro has a market cap of $550 Million and a Forward PE of 30. The stock sports Zacks Style Scores of “D” in Value, due to its high valuation. The stock has had a very volatile year, with trading a low of 20.72 in February and a high of $38.01 in June. Faro was trading at $35, before a miss on earnings, which caused the stock to plummet almost 15%.
Q2 EPS results
The company reported Q2 EPS on August 2nd, with the numbers coming in at $0.20 verse the $0.30 expected. Revenues came in lower than expected at $78.5 Million against the $84.5 Million expected.
Investors sold the stock on the EPS miss, sending it back down to a low of $30.20 before bouncing. Now the stock is trading around the $33 level and investors should be weary of falling estimates.
Over the last 30 days, estimates have been revised lower for all time frames. For fiscal year 2016, the numbers have been taken down 16%, from $1.31 to $1.10. For 2017, estimates are now seen at $1.52, down from $1.37 or 10%.
A Better Option
Vasco Data (VDSI – Snapshot Report) is a Zacks Rank #2 (Buy) that designs, develops, markets and supports security products and services which manage and secure access to computer systems of corporate and government customers. The company was founded in 1991, has 582 employees and is headquartered in Oakbrook Terrace, Illinois.
Vasco has a market cap of $740 million and a Forward PE of 30.
On July 28th the company beat EPS by a penny and beat on revenue estimates. Revisions to earnings estimates have spiked higher over the last year. For fiscal year 2016, estimates have been revised 79% higher, while 2017 has seen a 40% jump.
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