Rofin-Sinar's bumpy morning
Rofin-Sinar Technologies (RSTI -- click to register for free RT streaming quote) hasn't seen anything like today since back in November when Jim Cramer brought them to the attention of the Mad Money crowd and kicked off a more volatilie period for this laser manufacturer.
I wrote about RSTI back then following Cramer's attention, and not a lot has changed about the company in the intervening months ... except for the fact that they released market-beating earnings this morning and, in an 11am conference call, brougth the initial excitement back down to earth (up about 8% as earnings came out, moderated to about a 2% rise following the call).
I'm pretty pleased with how things are going for RSTI -- I still have them pegged as a relatively slow grower compared to many of my holdings, but I am very pleased about their ability to work through the problems in european and US manufacturing by relying more heavily for growth on their micro-lasers (used in chip manufacture, etc.) and their asian sales. For a relatively small company with a market cap well below $1 billion, they've got a very solidly diversified customer base around the world and a very broad offering of products for non-correlating industries (like semiconductors and auto manufacturing, which don't move in tandem). In the words of CEO Gunther Braun from today's release, "With positive developments in our Micro and Marking businesses, we were able to compensate for the softness in our Macro business." Having those three very different businesses under one roof gives us some significant protection from business cycles in any one industry.
So what do we hear from earnings? Well, the headline number this morning, and the one that got the market moving up so fast, was that they beat the 62 cent earnings estimate handily with a nice 73 cent quarter -- as we saw from Formfactor last night, beating earnings estimates is always good for the stock price.
They also had great margins last quarter -- 43% gross margins, higher than they've hit in years. Operating and net margins were also slightly better than recent quarters ... nothing to dance about, but encouraging. The Fool published a brief take on their margins history before earnings, and I see continued slow improvement -- just what the doctor ordered.
Their two main segments, micro and macro lasers, were near mirror images -- macro lasers, used for welding in manufacturing and heavily used in auto manufacturing, saw a sales decline of about 7% ... but micro lasers, used in semiconductors and similar applications, were up 18%. No surprises, and they are focused on improving sales of their macro welding lasers this year.
I haven't yet listened to the call, but I assume they tempered their forecasts for this year due to the softness in european and US auto manufacturing. Regardless, I think this is a fine company to hold for great diversification across some important industries, and I like the fact that their relatively small size makes it a little easier for them to go unnoticed while they grow (assuming Jim Cramer doesn't bring them up again).
I wrote about RSTI back then following Cramer's attention, and not a lot has changed about the company in the intervening months ... except for the fact that they released market-beating earnings this morning and, in an 11am conference call, brougth the initial excitement back down to earth (up about 8% as earnings came out, moderated to about a 2% rise following the call).
I'm pretty pleased with how things are going for RSTI -- I still have them pegged as a relatively slow grower compared to many of my holdings, but I am very pleased about their ability to work through the problems in european and US manufacturing by relying more heavily for growth on their micro-lasers (used in chip manufacture, etc.) and their asian sales. For a relatively small company with a market cap well below $1 billion, they've got a very solidly diversified customer base around the world and a very broad offering of products for non-correlating industries (like semiconductors and auto manufacturing, which don't move in tandem). In the words of CEO Gunther Braun from today's release, "With positive developments in our Micro and Marking businesses, we were able to compensate for the softness in our Macro business." Having those three very different businesses under one roof gives us some significant protection from business cycles in any one industry.
So what do we hear from earnings? Well, the headline number this morning, and the one that got the market moving up so fast, was that they beat the 62 cent earnings estimate handily with a nice 73 cent quarter -- as we saw from Formfactor last night, beating earnings estimates is always good for the stock price.
They also had great margins last quarter -- 43% gross margins, higher than they've hit in years. Operating and net margins were also slightly better than recent quarters ... nothing to dance about, but encouraging. The Fool published a brief take on their margins history before earnings, and I see continued slow improvement -- just what the doctor ordered.
Their two main segments, micro and macro lasers, were near mirror images -- macro lasers, used for welding in manufacturing and heavily used in auto manufacturing, saw a sales decline of about 7% ... but micro lasers, used in semiconductors and similar applications, were up 18%. No surprises, and they are focused on improving sales of their macro welding lasers this year.
I haven't yet listened to the call, but I assume they tempered their forecasts for this year due to the softness in european and US auto manufacturing. Regardless, I think this is a fine company to hold for great diversification across some important industries, and I like the fact that their relatively small size makes it a little easier for them to go unnoticed while they grow (assuming Jim Cramer doesn't bring them up again).
Labels: RSTI
This article posted by One Guy @ 2/02/2006 01:41:00 PM 0 comments
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