This engineering and consulting firm is eating up its competition. The company is forecasted to grow at an annual rate of 23.3% over the next five years.
NV5 Global, Inc. (NVEE)
From BI Research
NV5 GLOBAL (NVEE; BI Rank = 5.9 – Buy) is a provider of professional and technical engineering and consulting solutions to public and private sectors. NV5 focuses primarily on five business verticals: construction quality assurance, infrastructure engineering and support services, energy, program management and environmental solutions. Projects can include planning, design, engineering, permitting, inspection and field supervision, and management oversight.
NV5 is growing via organic growth and acquisitions. Acquisitions not factored into guidance until completed, will likely ultimately carry final 2019 EPS to or above the level that analysts were originally looking for—$3.88. And NV5 has recently completed two. On 4/8, the Company announced the acquisition of JV Surveying, which operates in California and Arizona, and conducts land surveys and mapping. In particular, the company specializes in ALTA surveys (American Land Title Association, so buyers can get title insurance) for commercial and utility customers. The acquisition complements NV5’s existing Alta Surveying business in the western U.S. Also, on 3/25, NV5 announced the acquisition of The Sextant Group a national, leading provider of audiovisual, information and communication technology, acoustics consulting, and design services, headquartered in Pittsburgh, PA. Sextant has 11 locations across the United States and has provided its expertise on over 2,000 projects in 46 states.
The all-cash acquisitions will both be immediately accretive, but no revenue or acquisition prices were given. So, while the midpoint of the 2019 guidance range for EPS of $3.51 - $3.93 given in early March was a little shy of the existing consensus of $3.88, even the mid-point reflects 15% growth in EPS. And these two acquisitions will doubtless raise guidance closer to that $3.88.
While gross revenue guidance of $485 - $520 million (up between 16% and 24%), didn’t quite bracket the existing consensus of $522 million, after these two acquisitions and those to follow in the rest of 2019, I have little doubt that guidance will be rising to meet or exceed earlier unguided expectations.
So, the big sell-off in early March seems rather silly to me, and it’s why I immediately went around scooping up shares and advising subscribers to do likewise. Recall that a year ago, in NV5’s first guidance for 2018, exclusive of any future acquisitions, was gross revenues of $370 - $405 million. And the final tally, with acquisitions, was well above the range at $418 million. Similarly, a year ago NV5 initially guided to adjusted EPS of $2.92 - $3.21, and ended up above the range as well, at $3.24.
So, the company is quite likely to ultimately table 2019 revenue and EPS above the initial guidance (and the 3/6 consensus), as it did in 2018, because it always starts the year out guiding conservatively (due to it being early in the year) and exclusive of acquisitions (it made 4 last year). Meanwhile, the acquisition pipeline remains robust and NVEE has rebounded $9, with much more to follow- Buy.
Tom Bishop, BI Research, www.biresearch.com, April 22, 2019