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  • Orbital UK Acquisition Provides Big Gains For CUI Global 0 comments
    Jan 16, 2014 9:13 AM | about stocks: CUI

    Electronics platform firm CUI Global (NASDAQ: CUI)recently announced to the public it was commissioned by an undisclosed Norweigan liquid natural gas processing facility, through its subsidiaryOrbital Gas Systems Inc., for three sampling systems using its proprietary VE Technology from The Linde Group. The initial order has an estimated value of $410,000. These units are expected to optimize the regeneration of drier beds in the said liquid natural gas processing plant. CUI Global President and CEO, William Clough, mentioned that the initial order is expected to boost revenue visibility in the future in an effort to expand the company's geographical reach, as well as move into new markets.

    The company made the right decision when it acquired Orbital Gas Systems. In fact, the company has been awarded the UK Energy and Resources Deal of the Year for 2013 by Acquisition International, a reputable European periodical. Orbital United Kingdom is a recognized company in the natural gas industry and the acquisition will increase its penetration into the electronics and natural gas markets. The deal is a testament to the company's strong business acumen when it comes to capital allocation and its continuing efforts to enhance its overall profitability.

    Acquisitions Yield Compelling Results

    Last month, CUI Global reported that it generated $45 million in revenues for the nine-month period ending September 30, 2012. On a year-to-date basis, revenues increased by 55 percent compared to the previous year's revenues of $29 million. Overall, the company said that operating cash flow registered at $2.37 million as a result of increasing revenue while keeping its selling and administrative expenses. As such, quarter-end cash and cash equivalents is at $19 million, along with short-term investments amounting to $11 million.

    Management attributed the robust financial results to the acquisition of Orbital UK, which was immediately consolidated in its financials. It reiterated its optimism over the future prospects of the company. Looking ahead, management is expected to continue its value-accretive acquisitions in its electronic technologies portfolio.

    Analysts are also bullish on the stock. Earlier this year, Loewen Ondaatje McCutcheon Ltd. initiated coverage on the stock with a buy rating. It also pegged the target price at $8 per share, implying an upside of 30 percent. It believes that the company has a strong niche being a provider in high quality components for power management and other electromechanical items. Further, the company is expected to receive more commercial orders for its GasPT2 intra-pipeline natural gas quality measurement tool.

    The market has confirmed its bullishness on the stock with year-to-date share performance of 13 percent. In contrast, peers such as Qualstar Corporation (NASDAQ: QBAK) declined by 28 percent for the same period and IntriCon Corporation (NASDAQ: IIN) likewise dropped by 11 percent. Given these latest developments, it seems that the company is well positioned to execute on its future plans and will translate to bigger capital gains for shareholders.

    Stocks: CUI
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