Why CalAmp Shares Soared

Why CalAmp Shares Soared

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 wireless communications technologist CalAmp soared 15% today after its quarterly results and outlook impressed Wall Street.

So what: The stock has soared in 2013 on a string of market-topping quarters, and today's second-quarter results -- adjusted earnings per share of $0.19 topped Wall Street by $0.03 on a revenue spike of 34% -- coupled with upbeat guidance suggest that the momentum isn't slowing. In fact, gross margin during the quarter increased 160 basis points to 33.7%, indicating that its competitive position and product mix are improving as well.

Now what: Management now sees third-quarter adjusted EPS of $0.19-$0.23 on revenue of $59 million-$63 million, versus the consensus of $0.21 and $57.8 million, respectively. "We believe CalAmp's strong momentum exiting the second quarter and healthy pipeline of new opportunities, driven by an expanding network of global channel partners and a robust portfolio of innovative products, provide the Company with a strong tailwind as we enter the second half of fiscal 2014," said CEO Michael Burdiek. Of course, with the stock now up more than 180% over its 52-week lows and trading at a 20-plus forward P/E, those prospects might already be baked into the valuation.

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