Why FARO Technologies Shares Popped

Before you go, we thought you'd like these...
Before you go close icon

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 FARO Technologies  rose 17% during intraday trading Thursday after the company handily beat expectations with its third-quarter earnings report.

So what: Quarterly sales rose 12.3%, to $68.2 million, which translated to an even more impressive 37.3% growth in net income, to $5 million, or $0.29 per share. By contrast, analysts were looking for earnings per share of just $0.21 on sales of $66.27 million.


Now what: CEO Jay Freeland weighed in: "Our strong third quarter revenue growth reflects improved market conditions, excellent sales execution and the positive effect of several new product launches.  We continued to accelerate our R&D spending in the quarter and we successfully leveraged our cost base to generate a 38% increase in earnings."

All in all, it was definitely a solid quarter for FARO, which had missed expectations for both revenue and earnings per share in each of its past twoquarters. That said, I think investors would be wise to note shares are currently trading for a premium at more than 41 times last year's earnings and nearly 32 times next year's estimates. Personally, I'd prefer to wait until FARO can prove this quarter's strong results are sustainable over the long run before I would consider stepping in.

Consider these three compelling long-term picks
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

The article Why FARO Technologies Shares Popped originally appeared on Fool.com.

Fool contributor Steve Symington has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. 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.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners