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CPI Aerostructures: Strong Quarter Possible

Stocks in this article: CVU

Several clues point to a very strong fourth quarter for CPI Aerostructures (CVU).

First, throughout 2009, CPI issued guidance calling for net income of $3.9 million to $4.3 million and revenue of $42 million to $45 million.

Using midpoint figures and the company's 2009 nine-month financial results, the guidance implies earnings per share will increase 80% to 27 cents. Sales would rise 35.9% to $12.5 million.

Second, in conference calls, the company has repeatedly stressed that if it believed it could not meet its guidance, it would relay a message to Wall Street. Well, it is now the beginning of 2010, and management has not issued such a message, strengthening the possibility that the fourth quarter will be strong.

Lastly, the company issued a press release on Jan. 14 saying fourth-quarter order flow had intensified.

What I don't possess is specific information on the 2010 forecast the company will provide in conjunction with the 2009 year-end results. I generally prefer to invest in companies that are capable of achieving consistent 30% EPS growth, so I will eagerly await the 2010 guidance.

That said, CPI has offered additional clues indicating 2010 will be a year of growth:

  • In its 2008 fourth-quarter financial release, CPI offered insight into its long-term growth goals in sales and net income growth, saying that it expected to achieve a compounded annual growth rate for revenue from 30% to 35%. The company also said it expected compounded annual growth in net income of 50% to 60%.

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