Why Benchmark Electronics Deserves A Closer Look

| About: Benchmark Electronics (BHE)

Benchmark Electronics (NYSE:BHE) has posted a mediocre performance at best over the past five years. The company's book value has gone from $18.15 in 2007 to $19.40 as of March 2012. So, why should one bother about even taking a deeper look into the company?

Well, for starters, Benchmark Electronics has a solid line of work, with a moderate backlog. Benchmark Electronics has a diversified portfolio of suppliers and customers. The customers are spread across five different industries, and Benchmark Electronics has only increased its diversification by decreasing sales in computers and increased industrial control and testing equipment. On top of that, the company has a backlog of $1.6 billion for fiscal year 2011, a slight increase of $0.1 billion from the previous year.

Second, Benchmark Electronics has strong financials. Its cash plus receivables total about $732 million, well more than its total liabilities of $398 million. This gives it a large amount of flexibility is dealing with its international operations.

However, that's not Benchmark Electronics' strongest financial point. Where this company shines is in its buyback program. Despite the fact that its stock is falling, Benchmark Electronics is trying to get in as many shares as it can afford. BHE has even decided to step up its program by extending it by $100 million on top of its current $100 million program.

From its 1Q 10-Q, Benchmark Electronics has $31 million left of its current program, giving it a total purchasing opportunity of $131 million. In fiscal 2011, the company bought back $56 million at an average price of $15.15 per share. That's at a price to book ratio of roughly 0.8.

I believe that Benchmark is definitely worth more than its current price, and that the currently low share price will only benefit current stockholders as BHE steps-up its buyback program.

Source: Click here.

Disclosure: I am long BHE.