The stock commands a trailing earnings multiple of 22 and a forward earnings multiple of 17, notable premiums to peer averages. But, Goldman gets "the sense that the stock has fallen somewhat out of favor." Precision's fiscal third-quarter adjusted earnings, announced Jan. 27, expanded 12% to $1.80, matching Goldman's estimate and the consensus. Sales, up 16% year-over-year, beat researchers' consensus estimate by 3.2%.
Goldman, consistent with its other picks, sees Precision as an ideal late-cycle play, predicting 20% revenue growth over the next three to five years. Goldman believes that Precision possesses "best-in-class management, returns on capital and cash generation, and a balance sheet already in a net cash position." It expects its stock to rise 22% to $180 in 12 months.