Metrologic
Instruments, Inc (MTLG) creates bar-code scanning and high-speed automated data
capture solutions.
Key
Information:
Fundamental:
Sector:
Technology
Industry:
Computer Peripherals
Liquidity:
Market
Capitalization: $429 Million
Average daily
volume (3-month): 150 Thousand Shares
Closing Stock
Price: $22.00
Risk
Proxies:
52-week high /
52-week low: 2.0
Beta: 2.21
Debt/Equity:
0.12
Profitable:
Yes
Valuation:
Price/Sales:
2.45
Price/Book:
3.22
Price/Earnings:
28.53
Price/2006
Analyst Earnings Estimates: 15.71
Fundamental
Analysis
Overview
Based on our
analysis of long-term growth, recent growth, growth projections, institutional
trading, and valuations, we believe MTLG is likely to appreciate in price
relative to other similar companies.
Long-Term
Growth
Metrologic
Instruments has grown revenue from $47 million in 1996 to $210.5 million in
2005, an annualized 18%; earnings grew from $3 million to $17.8 million over
the same period, an annualized 22%. Return on equity (ROE) over the past
five years has been a robust 10.5%.
We view the
strong long-term results as a positive signal of management effectiveness and
competitive positioning.
Recent
Growth
Revenues for
Q4 2005 came in 13.0% above revenues for Q3, and 14.9% above revenues for Q4 of
2004.
Recent revenue
growth has been in line with long-term growth rates.
Institutional
Transactions
Recent
institutional transactions have been positive. 2.6 million shares were
recently bought by institutions; only 1.6 million shares were recently sold.
Analyst
Forecasts
Analysts
forecast 2005 EPS of $1.17, and 2006 EPS of $1.40. The spread of these
estimates are $0.04 and $0.08, respectively. Forecasts are for 20% annual
EPS growth over the next five years.
During the
past three months, analysts have increased their estimates for this quarter,
and this FY.
- This quarter: From $0.22 to $0.25
- This fiscal year: From $1.10 to $1.17
During the
MRQ, EPS came in at $0.39, $0.12 above consensus estimates.
Four analysts
rate the stock as a Strong Buy, three rate it as a Buy, and one rates it as a
Hold.
We view the
tight analyst estimate spread, strong long-term growth estimates, increasing
estimates, and positive ratings as bullish indicators for the stock.
Comparative
Valuations
MTLG trades
with a lower P/EG ratio than the industry average; it's P/EG ratio is .98; the
industry average P/EG ratio is 1.21. The current P/E ratio is similar to
the industry average; it is 28.53 for MTLG, and 29.00 for the industry.
The low
relative P/EG ratio is a positive for MTLG.
Valuations
MTLG's P/E ratio is similar to competitors. However, we do
not think that this is fair, given the company's relatively strong historic and
expected growth rates. We believe the stock is a buy as long as the P/EG
ratio is at least 10% below the industry average, or until fundamentals change
in another significant way.
Technical
Analysis
Our technical
analysis indicators are neutral for MTLG.
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Key
Levels
Buy:
Market
We are
fundamentally bullish on the stock
Target:
Until fundamentals change, or the stock reaches a P/EG ratio equal to the
industry average
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