Nighthawk Radiology Showing Improved Profitability (NHWK)

NightHawk - a teleradiology company with a recent IPO we discussed - just posted 2005 Q4 and FY numbers on 9 Mar 2006. For Q4, they had $18.5M revenue, $13.3M operating expenses, for $5.2M operating income, which at 24.4M diluted shares gives quarterly operating earnings of $0.21/share.

Assuming there is no seasonality in the radiological services industry and that there is no further stock dilution, annualizing that number gives forward projected FY operating EPS of $0.84 ($0.21x4), which at a current price for NHWK of ca. $25/shares gives a forward operating P/E of 28.

That's a premium to the market, but isn't crazy. They are showing some improved profitability from operations, but we'll maintain our Blah rating until there is a bit more clarity on the consistency of their forward operations and/or there is a more compelling entry point.

Note that on a GAAP basis they showed a $9.1M Q4 loss, due almost solely to a "Change in fair value of redeemable preferred stock conversion feature."

NHWK 3 month chart: