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Rogers Corporation Upped to Strong Buy

Zacks Equity Research


On January 5, Zacks Investment Research upgraded Rogers Corporation ( ROG) to a Zacks #1 Rank (Strong Buy).


Why the Upgrade? 


Rogers Corporation has been witnessing rising earnings estimates on the back of improved third quarter 2012 results and strong outlook for the quarter ahead. Moreover, this producer of specialty materials and components delivered positive earnings surprises in 2 of the last 4 quarters with an average surprise of 21%. The long-term expected earnings growth rate for this stock is 13.5%    


Rogers Corporation reported fiscal third-quarter (ended September 30) results on November 5, 2012. Earnings came in at 69 cents per share, beating the Zacks Consensus Estimate by 7.8%. Even though earnings declined on a year-over-year basis, there has been an improving trend so far in 2012 with the third quarter witnessing a 47% surge from the prior quarter and a whopping 165% increase from the first quarter of 2012.


The company’s restructuring and streamlining activities, which include efficiencies in supply chain and manufacturing operations, cost reduction activities and headcount reductions contributed around $4.5 million during the quarter, ahead of the expected level of $3.0 million. The company expects better operating profit leverage on future sales growth given the lower cost structure now in place. Going forward, these initiatives are expected to help the company to counter weak market conditions.


For the fourth quarter, the company expects revenues between $129 million and $135 million. Compared to the year-ago quarter, the guidance projects annual sales growth of 2% to 7%. Earnings per share are expected between 69 cents and 79 cents, which suggests a year-over-year increase of 64% to 88%.


The Zacks Consensus Estimate for fiscal 2012 increased 7% to $2.18 per share as all the estimates were revised higher over the last 60 days. For fiscal 2013, half of the estimates were revised higher during the same period, lifting the Zacks Consensus Estimate by 1% to $2.84 per share. This suggests a year-over-year climb of 30.5%.


Other Stocks to Consider 


Other stocks in the same industry with favorable Zacks Rank and worth considering are AAC Technologies Holdings Inc.  ( AACAY),  LightPath Technologies, Inc. ( LPTH) and Sparton Corp.  ( SPA) which hold Zacks #1 Rank (Strong Buy).

Read the Full Research Report on ROG

Read the Full Research Report on SPA

Read the Full Research Report on AACAY

Read the Full Research Report on LPTH

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