Will A Positive Earnings Report Help Exactech (EXAC) Stock?

NEW YORK (TheStreet) -- Exactech (EXAC) released its 2014 first quarter earnings report after the closing bell on Monday. The company's shares finished up 1.96% to $22.93 in trading.

Year over year quarterly revenue was up 7% to $63.3 million in the first quarter, in line with analysts consensus estimates of revenue of $63.5 million.

Net income for the quarter was $4.2 million, or 30 cents per diluted share, beating analysts EPS estimates of 29 cents per share.

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TheStreet Ratings team rates EXACTECH INC as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate EXACTECH INC (EXAC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, growth in earnings per share, compelling growth in net income, revenue growth and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • EXACTECH INC has improved earnings per share by 13.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EXACTECH INC increased its bottom line by earning $1.12 versus $0.96 in the prior year. This year, the market expects an improvement in earnings ($1.21 versus $1.12).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the Health Care Equipment & Supplies industry average, but is less than that of the S&P 500. The net income increased by 18.4% when compared to the same quarter one year prior, going from $3.88 million to $4.60 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 7.3%. Since the same quarter one year prior, revenues slightly increased by 3.9%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • EXAC's debt-to-equity ratio is very low at 0.19 and is currently below that of the industry average, implying that there has been very successful management of debt levels. To add to this, EXAC has a quick ratio of 2.18, which demonstrates the ability of the company to cover short-term liquidity needs.
  • You can view the full analysis from the report here: EXAC Ratings Report
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