Analogic Shares Popped: What You Need to Know

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of medical imaging and security system maker Analogic (NAS: ALOG) are shooting 12% higher today after the company reported stronger-than-expected second-quarter results.

So what: For the quarter, Analogic reported an 8% rise in sales to $126.4 million and a non-GAAP profit of $0.84. Sales came in just shy of the $127 million analysts had been looking for, but the company's bottom-line profit beat Wall Street's estimate of $0.59 by a mile! Non-GAAP operating margins were in double digits across all sectors, and the company benefited from a $10 million tax refund and a $2.5 million gain from the sale of an equity interest. Although no specific guidance was given, management did bump up its previous sales growth estimates to high single-digit growth year over year for fiscal 2012.

Now what: This was a fantastic quarter all around for Analogic. Understand that beats as large as the one we saw this quarter are probably not going to happen often because of the one-time boosts to its bottom line. But double-digit operating margins across all business segments sound fantastic to me -- especially with management talking up the stability in its defense segment, which has been its weak segment so far this year with sales down 5% YTD. Overall, this could be the start of a nice run for Analogic if it can keep its margins up. At 20 times forward earnings, the stock isn't a bargain, but no one ever said you get growth for free in the stock market.

Craving more input? Start by adding Analogic to your free and personalized watchlist so you can keep up on the latest news with the company.

At the time this article was published Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't 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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