Today’s news: KLX (KLXI) reports third-quarter earnings beat; steel stocks up.
KLX Inc. (KLXI) reported adjusted third-quarter EPS of $0.88 this morning, above all analysts’ estimates. The Thomson Reuters consensus estimate was $0.78.
KLXI reported “new contract wins and market share gains of approximately $125 million for F-35 Joint Strike Fighter, Pratt & Whitney GTF engine and Bombardier C-Series.” The company raised earnings guidance, now expecting $3.10 and $3.80 adjusted EPS in fiscal 2018 and 2019 (January year-end), representing EPS growth rates of 195% and 22.9% respectively. The company’s full-year revenue targets are now $1.75 billion and $1.95 in 2018 and 2019, vs. approximately $1.5 billion last year.
The company repurchased $50 million of stock during the quarter, and $80 million of stock during the last nine months.
KLXI is “a leading distributor and value-added service provider of aerospace fasteners and consumables, and a provider of services and products to the oil and gas exploration and production industry,” and an extremely undervalued, small-cap aggressive growth stock.
In yesterday’s issue, I wrote, “Now that KLXI appears imminently capable of rising past 56 to new highs, I’m moving the stock back to Strong Buy. Buy KLXI now.” The stock’s up near 10% this morning, and the price chart is extremely bullish. I would optimally try to buy the stock on a down day, but all in all, I expect more capital gains in the coming year. I also want to reiterate that profitable small-cap stocks make excellent takeover targets. Strong Buy.
Steel stocks are gaining attention as news spreads that the U.S. government is addressing foreign trade abuses within the industry. Both Commercial Metals (CMC) and Nucor (NUE) are high-EPS growth, low P/E dividend-paying stocks. I’d buy them at the current prices, and expect to hold them for at least six-12 months. Strong Buy.