Drawing upon past experiences to make predictions about the future is something we all do from time to time. This process can provide useful insight into how to avoid mistakes, as well as recognize opportunities. That is why carefully reviewing earning trends is an integral part of the due diligence process for any investment consideration. Strong earnings is an appealing trait, but we know that it does not automatically translate into a company's future profitability. For this reason, we considered small cap stocks with great earning trends that have EPS growth projections above 25% over the next five years. Use the graphs and data below to begin your own assessment of these small cap stocks.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The 5-Year Expected EPS Growth Rate is a long-term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.
EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. EPS growth rates help investors identify stocks that are increasing or decreasing in profitability. This profitability metric is generally a key driver in the price of the stock, as it directly correlates to the profitability of the company as a whole.
The Net Margin is a profitability metric that illustrates, by percentage, how much of every dollar earned gets turned into a bottom line profit. This is just one of many profitability metrics used by investors and analysts to better understand what the company is being left with at the end of the day. Generally, a firm that can expand its net profit margins over a period of time will see its stock price rise as well due to the trend of increasing profitability. Net Margin = Net Income/Total Revenue
We first looked for small cap stocks. We then looked for businesses with projected high growth, measured by 5-year projected EPS growth above 25%. Next, we then screened for businesses that have shown strong bottom line growth over the last year (1-year fiscal EPS growth rate>10%)(Net Margin [TTM] >10%). We did not screen out any sectors.
Do you think these small cap stocks have a strong outlook? Use our list to help with your own analysis.
1) NetQin Mobile Inc. (NQ)
|5-Year Projected Earnings Per Share Growth Rate||40.00%|
|Earnings Per Share Growth Rate||112.23%|
NQ Mobile Inc. operates as a provider of mobile Internet services focusing on security, privacy, and productivity worldwide. It provides a suite of mobile Internet services that protect mobile users from security threats and enhance their productivity. The company was formerly known as NetQin Mobile Inc. and changed its name to NQ Mobile Inc. in April 2012. NQ Mobile Inc. was founded in 2005 and is headquartered in Beijing, the People's Republic of China.
2) Pacific Capital Bancorp (PCBC)
|Industry||Regional - Pacific Banks|
|5-Year Projected Earnings Per Share Growth Rate||46.50%|
|Earnings Per Share Growth Rate||142.72%|
Pacific Capital Bancorp operates as the bank holding company for Santa Barbara Bank & Trust, National Association that provides various commercial and consumer banking services to households, professionals, and businesses. It offers depository services, such as checking accounts, interest-bearing checking accounts, money market demand accounts, individual retirement accounts, savings accounts, and certificates of deposit. The company was founded in 1960 and is headquartered in Santa Barbara, California.
3) Geospace Technologies Corporation (GEOS)
|Industry||Scientific & Technical Instruments|
|5-Year Projected Earnings Per Share Growth Rate||37.00%|
|Earnings Per Share Growth Rate||107.85%|
Geospace Technologies Corporation engages in the design and manufacture of instruments and equipment used in the acquisition and processing of seismic data; and characterization and monitoring of producing oil and gas reservoirs. It also designs, manufactures, and distributes thermal imaging equipment and thermal media products for the screen print, point of sale, signage, and textile markets. The company was formerly known as OYO Geospace Corporation and changed its name to Geospace Technologies Corporation in October 2012. Geospace Technologies Corporation was founded in 1980 and is headquartered in Houston, Texas.
4) U.S. Silica Holdings, Inc. (SLCA)
|Industry||Industrial Metals & Minerals|
|5-Year Projected Earnings Per Share Growth Rate||58.70%|
|Earnings Per Share Growth Rate||165.57%|
U.S. Silica Holdings, Inc. produces and sells various commercial silica and industrial mineral products. The company offers whole grain commercial silica products to be used as fracturing sand in connection with oil and natural gas recovery; the manufacturers of architectural and solar glass; and foundry and building products industry. The company was formerly known as GGC USS Holdings, Inc. and changed its name to U.S. Silica Holdings, Inc. in July 2011. The company is headquartered in Frederick, Maryland. U.S. Silica Holdings, Inc. is a subsidiary of GGC USS Holdings, LLC.
*Company profiles were sourced from Google Finance and Yahoo Finance. Financial data was sourced from Finviz on 10/26/2012.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.