Some things to consider:
· The average analyst earnings estimate was $0.44 EPS, the company delivered $0.54, a 19% beat.
· Revenue was expected to be $28.6mm, it came in at $35.7mm, a near 20% beat.
· Based on the old estimates the price target is $40, the stock is trading at $35 in the aftermarket.
· The industry average Debt/Total capital stands at 25% right now, BOOM is at 0.72%.
· The industry average operating margin is about 4%, BOOM is at 16%.
· The industry average ROE is 12%, BOOM has a ROE of 38%.
I think the analysts will revise their estimates upward given how conservative they are on the growth of the company.
The other side of the coin is that Dynamic Materials is approaching maximum production and so growth will revert to the mean. It seems management understands this and that is why they expect to have doubled production capacity in the Mt. Braddock facility by the end of the second quarter, expand their cladding operations in Europe and established a CAPEX budget of approximately $7.1 million in 2007.
I think BOOM is worth owing down here below $40 in light of this new information. In the short term, I expect analyst revisions to be a catalyst to take this stock higher, as clearly earnings alone have not.
BOOM 1-yr chart: