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Encore Wire (WIRE): Zacks Rank Buy

Brian Bolan

Encore Wire (WIRE) has blown out recent expectations and analysts are moving estimates higher. The stock is a Zacks #1 Rank (Strong Buy).

Company Description

Encore Wire Corporation manufactures and sells copper electrical building wires and cables primarily in the United States. It's NM-B, UF-B, THWN-2 and metal clad and armored cables are all manufactured with copper as the conductor. It also purchases small quantities of other types of wire to re-sell to customers that buy products that it manufactures. The company is based in McKinney, Texas.

Big Earnings Surprises of Late

Over the last four quarters, WIRE has posted three beats and one miss. The miss was fairly large at 18% below the Zacks Consensus Estimate or $0.09. The beats, however, far outpace that lone miss. Earnings surprises of 130%, 84% and 187% are just the type of thing that aggressive growth investors are looking for.

Only one of the beats ended up driving the stock higher by 10%. It was the 84% beat in the September 2011 quarter. The gain of 15% in that quarter followed the lone miss and slide of 13% in the June 2011 quarter.

Recent Earnings Report

The December 2011 quarter saw a huge beat and little move in the stock. The Zacks Consensus Estimate was calling for EPS of $0.24, and the company reported earnings of $0.69, or $0.45 ahead of estimates. Revenue came in at $248 million or about $3 million below expectations and lower than the $256 million reported in the year ago period.


Aggressive Growth stock investors may be confused for value investors with this stock. A forward PE of 14X is a small premium to the industry average of 11x, and the trailing twelve months PE of 14X is a discount to the industry average of 20X. Price to book and price to sales also show a multiple that is a discount to the industry average.

The Chart

A quick look at the price and consensus chart for WIRE shows that analysts have been moving expectations higher while the stock is following those expectations. The outsized beats are great, but when the company can couple revenue growth with those beats, you can expect the stock to soar. WIRE is a Zacks #1 Rank (Strong Buy).

WIRE - ticker WIRE >

Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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