Arotech Corp (ARTX - Free Report) posted a huge 700% positive earnings surprise on its most recent earnings release. Expectations continue to move higher and the stock is a Zacks Rank #1 (Strong Buy). Let's take a look at the fundamentals of this stock and explore why it is a Zacks Rank #1 (Strong Buy) and the Bull of the Day.
Why I Like It
A good earnings history when compared to the Zacks Consensus Estimate.This is a small cap and will likely outperform if small caps remain in favor.
This is a perfect "Trump Play" as it fits with what the new Administration wants.
Recent management change should bring stability at the top.
The Recent Numbers
I like to do a review of the most recent quarter for stocks that I highlight as Bulls of the Day. ARTX reported the September 2016 quarter back in early November.
The most recent quarter was a beat on top and bottom. The company posted EPS of $0.06 when the Zacks Consensus Estimate was calling for a loss of $0.01. That translates into a positive earnings surprise of 700%.
Revenue came in at $24M which was good for a 1.25% positive revenue surprise. As a result, the stock was bid up by more than 16% in the session following the report.
Description
Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and homeland security markets, including multimedia interactive simulators/trainers and advanced zinc-air and lithium batteries and chargers. Arotech operates two major business divisions: Training and Simulation, and Power Systems.
Earnings History
The company has a decent history of beating the Zacks Consensus Estimate. There were two misses over the last five quarters. The rest of the reports were all beats.
Estimates
The estimate picture looks really good, with the Zacks Consensus Estimate for 2016 moving from a loss of $0.09 in October to loss of one cent in November. The Zacks Consensus Estimate for 2016 has not moved since that time.
The 2017 number moved from $0.02 in October to the current level of $0.08.
One More Chart
Let's take a look at one the great features of the Zacks website, you can find this function for every stock on the "Financial Overview" section. You can chart all sorts of things against, well all sorts of things but I like to chart them against the stock price.
For ARTX I thought it would be helpful to look at margins as compared to the stock price over the last few years.
This chart tells me that as margins improve, the stock tends to move right along with them.
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By Brian Bolan
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