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%.
- The company offered broad bullish commentary regarding 2010 prospects, saying, "We expect 2010 to be another year of growth, and we plan to issue our guidance when we announce results for the 2009 fourth quarter and year."
- In its third-quarter 2009 financial report, the company said, "Unawarded solicitations remain at a high level with open solicitations totaling a maximum realizable value of approximately $393 million."