GeoEye: Another Unfairly Neglected Niche Growth Company

GeoEye (GEOY) is one of the few stocks I can find that is not overextended, yet still has a chart where prices are holding support. However, I did not want to expand the position ahead of earnings - Monday we had the results and all systems seemed to be go after the scare about a technical malfunction weighed on the shares.

Via Reuters

• Satellite imagery company GeoEye Inc (GEOY) posted a better-than-expected quarterly profit, helped by full recognition of revenue from its newest satellite, GeoEye-1.
• Second-quarter net income was $9.6 million, or 46 cents a share, the company said in a filing with the U.S. Securities and Exchange Commission. Revenue more than doubled to $72.7 million.
• Analysts were expecting earnings of 39 cents a share, before items, on revenue of $73.9 million, according to Reuters Estimates.
• Backlog was about $325.2 million at June 30, the company said.
• Canaccord Adams analyst Jeff Rath said the incremental improvement from the previous quarter was almost all from GeoEye-1.

More

details

• The company also said it does not expect to build or commission an accelerated GeoEye-2 satellite without assurances of an expanded National Geospatial-Intelligence Agency [NGA] agreement.
• The NGA, a U.S. Department of Defense agency, is GeoEye's largest customer accounting for about 65 percent of its revenue. GeoEye-1 was funded by a $500 million contract that the company won under NGA's NextView program. "Only when we have visibility on the expected contractual demand for a new satellite from the NGA do we expect to make a decision as to whether to invest the capital necessary to build and commission GeoEye-2 on an accelerated basis," the company said in a filing with the U.S. Securities and Exchange Commission.
• Dougherty & Co analyst Jeff Evanson said the company will not seek a capital raise for GeoEye-2 that will be dilutive to shareholders. "If the government wants GeoEye-2 by 2013, they will have to make financial commitment to it. Otherwise, GeoEye is going to fund the next satellite with free cash flow," Evanson said in an e-mail.
• The company said if it does not build GeoEye-2 on an accelerated basis, it would most likely proceed in such a way that it could be used as a replacement satellite for GeoEye-1 in the 2016 to 2017 timeframe.

I've been surprised (again) how little attention these niche growth companies are getting as people flood into speculative junk, losing money left and right or "shrinking" their way to prosperity via a bevy of cost cutting. Competitor

DigitalGlobe (DGI)

IPO'd in May and has been a complete snoozefest. [

May 13, 2009: Starting GeoEye on; Should Benefit from DigitalGlobe IPO

] And frankly so has GeoEye. DitigalGlobe actually has the better metrics of the two.

Just another example of things that really make little sense.

Long GeoEye in fund; no personal position