Why FARO Tech Shares Surged

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 three-dimensional measurement technologist FARO Technologies climbed 16% today after its quarterly results topped Wall Street expectations.

So what: The stock has been slammed over the past year on a string of disappointing quarters, but better-than-expected fourth-quarter results -- EPS of $0.46 on revenue of $80.7 million versus Wall Street's view of $0.31 and $68.0 million, respectively -- are forcing analysts to increase their valuation estimates.Although revenue was flatand margins shrank over the year-ago period, the slowing rate of decline gives investors some optimism that the worst is behind it.

Now what: I'd continue to be cautious about buying into FARO. "In 2013, we anticipate continuing market uncertainty," said President and CEO Jay Freeland. "To address this and drive improved performance, we expect to continue to strengthen our product portfolio, increase sales coverage around the world, and tighten cost controls across the Company's operations." But with the stock up about 30% from its 52-week lows and trading at a 20-plus forward P/E, investors might now be expecting too much of an improvement in too short of a time period.

Interested in more info FARO? Add it to your watchlist.

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The article Why FARO Tech Shares Surged originally appeared on Fool.com.

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