American Science & Engineering (ASEI): Zacks Rank Buy

Zacks

American Science & Engineering Inc. (ASEI) is a provider of security and protection services that has been offering regular quarterly dividend payments for years. This Zacks #1 Rank (Strong Buy) has a solid 5-year average dividend yield of 1.8%. On November 5, ASEI posted impressive fiscal second quarter results that included an earnings surprise of 22.6%. For all of these reasons, American Science & Engineering looks to be a good stock for investors seeking both growth and income.

Driving Catalysts

ASEI has been offering regular dividend payments to shareholders since 2007. Recently, it received approval for a quarterly dividend payment of 50 cents to shareholders on December 3, 2012. The stock currently yields a solid 3.3% based on an annual dividend rate of $2.00 per share.

Apart from dividends, earnings per share in its fiscal second quarter were 76 cents, up 2.7% year over year and above the Zacks Consensus Estimate of 62 cents. However, revenue fell 15.5% to roughly $46.3 million.

Earnings Momentum on the Rise

The Zacks Consensus Estimate for the fiscal year ending March 2013 is currently $2.78 per share, which is up 9% in the past month. The last 7 days alone have attributed for nearly 7% of that gain.

Meanwhile, the Zacks Consensus Estimate for the fiscal year ending March 2014 is $2.81 per share, up 20% in 30 days and 4.4% in 7 days.

Valuation

American Science & Engineering is currently trading at a forward P/E of 21.3x, compared with 15.4x for the peer group. The company's ROE stands at 7.9%, versus the peer group average of 3.0%.

As can be observed from the chart below, the last six months have been favorable for the company as its stock climbed from a $50.00 to $60.00. The outlook seems bright for the stock with estimates moving higher for the years ahead.

Founded in 1958, American Science & Engineering Inc. is headquartered in Billerica, Massachusetts and is one of the leading security solutions providers in the U.S. and internationally. The company designs and sells X-ray inspection and other detection products, especially designed for homeland security, force protection, and other critical defense applications. Currently, the company has a market capitalization of $490 million.


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