Rofin-Sinar Technologies’ (RSTI)
from Upside
Rofin-Sinar Technologies’ (RSTI) installed base of more than 52,000 lasers are used for welding, cutting, and marking. The company’s growing global footprint spans more than 20 facilities in North America, Europe, and Asia. Roughly one-quarter of annual sales are for recurring services and parts, as key end markets include machine tools (37% of laser-related sales) and automotive (12%).
A favorable product mix, combined with more efficient production and lower manufacturing costs, is helping boost profit margins. For the September quarter, management sees per-share earnings of $0.48 to $0.53, with the midpoint implying 19% growth. For fiscal 2015 ended September, the consensus is $1.45, up 63%.
Despite outstanding per-share profit growth of 67% over the last 12 months, shares trade at 18 times trailing earnings, 18% below their 10-year average. Even if the P/E remains at its current level, the stock stands to rise more than 35% over the next 12 months if Rofin merely meets the consensus profit estimate of $1.90 for fiscal 2016 ending September. While that might be a stretch, shares seem capable of advancing 20% in the year ahead. Rofin is being initiated as a Buy.
Richard J. Moroney, CFA, Upside, www.upsidestocks.com, 800-233-5922, October 2015