(WIRE) - Earnings Momentum - company kept streak intact, crushing the Street's estimate with a 167.8% upside surprise

Encore Wire Corporation (WIRE), which was first presented as a Value stock on May 23, continues to trade at a discounted valuation. The company beat the Street's earnings estimate for the past five quarters, most recently by an eye-popping 167.8%. Consensus estimates have been shooting upward for this Zacks #1 Rank stock. The company has a return on equity of 59%, compared to the industry average of 18%. Full Analysis Encore Wire Corporation manufactures copper electrical building wire and cable in the United States. The company supplies both residential and commercial wire. WIRE also purchases small quantities of other types of wire to resell to the customers that buy its products. When WIRE was first featured as a Value stock on May 23, it had exceeded analysts' earnings expectations in four consecutive quarters. On Jul 25, the company kept this streak intact by absolutely crushing the Street's estimate. WIRE reported second-quarter profits of $2.41 per share--equating to an astounding 167.8% positive surprise. Its year-over-year improvement was even more mind-boggling, with the company's earnings in the prior-year period amounting to 10 cents per share. Net sales soared 113.8% to a record $362.0 million, thanks mainly to higher wire prices. For the first six months of the year, net sales rose 100.4% to $614.1 million. Profits came in at $73.2 million, compared to $3.5 million in the first six months of 2005. The company increased revenues for the past four years while expanding gross margins and growing profits for the past three. To say that consensus estimates have been trending higher would be an understatement. Profit forecasts for this quarter and next quarter ballooned 108.0% and 116.4%, respectively, over the past 30 days. Analysts' projections for this year and next skyrocketed 103.0% and 80.6%, respectively, over the past month. Despite the company's earnings surprises and estimate revisions, it continues to trade at a discounted valuation of only 7.1x trailing 12-month earnings and at 5.9x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 16.1x trailing 12-month earnings and at 15.5x its current fiscal-year estimated earnings. The company has a price-to-book ratio of 3.7, compared to 4.0 for the market. WIRE's level of profitability, as measured by its return on equity, not only tops the industry average but absolutely destroys it. The company has a ROE of 59%, compared to 18% for the industry. Note: The Zacks Rank is a very sensitive indicator that can change frequently for an individual stock. This important indicator is updated daily on Zacks.com and is available to Zacks Premium subscribers. As such, it is prudent to check the site for the latest Zacks Rank on the stocks highlighted in this section. Simply click the link for the stock or enter the symbol in the ticker entry box in the upper left hand corner of the web site. Content Courtesy: Zacks Investment Research #1 Ranked Stocks Highlight Archive To truly take advantage of the Zacks Rank, you need to first understand how it works. That is why we created the free special report: Zacks Rank Guide: Harnessing the Power of Earnings Estimate Revisions. | Blog Home| VitalStocks Home