ESCO Technologies Meets on the Top Line, Misses Where It Counts

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ESCO Technologies (NYS: ESE) reported earnings on Feb. 7. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q1), ESCO Technologies met expectations on revenues and missed expectations on earnings per share.

Compared to the prior-year quarter, revenue shrank and GAAP earnings per share shrank significantly.

Gross margins grew, operating margins shrank, net margins shrank.

Revenue details
ESCO Technologies notched revenue of $152.9 million. The 10 analysts polled by S&P Capital IQ predicted a top line of $151.5 million. GAAP sales were 4.4% lower than the prior-year quarter's $159.9 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.19. The eight earnings estimates compiled by S&P Capital IQ forecast $0.27 per share. GAAP EPS of $0.19 for Q1 were 53% lower than the prior-year quarter's $0.40 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 39.4%, 40 basis points better than the prior-year quarter. Operating margin was 5.5%, 450 basis points worse than the prior-year quarter. Net margin was 3.4%, 340 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $172.3 million. On the bottom line, the average EPS estimate is $0.43.

Next year's average estimate for revenue is $721.3 million. The average EPS estimate is $2.14.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 69 members out of 77 rating the stock outperform, and nine members rating it underperform. Among 29 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 27 give ESCO Technologies a green thumbs-up, and two give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ESCO Technologies is outperform, with an average price target of $39.10.

Over the decades, small-cap stocks, like ESCO Technologies have provided market-beating returns, provided they're value priced and have solid businesses. Read about a pair of companies with a lock on their markets in "Too Small to Fail: Two Small Caps the Government Won't Let Go Broke." Click here for instant access to this free report.

At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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