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Thermon Group Hits New 52-Week High

Zacks Equity Research

Shares of Thermon Group Holdings, Inc. (THR) reached a new 52-week high of $28.70 during its trading session on Nov 26, up from its previous high of $28.25 reached on Nov 8, 2013.

Thermon Group closed the trading day on Nov 26 at $28.00, reflecting a solid year-to-date return of 17.4%. The trading volume for the session was 0.23 million shares. Further upside potential exists for this Zacks Rank #3 (Hold) diversified machinery maker, as can be deduced from its projected earnings growth rate of 18.3% for the next five years and earnings estimate revision for 2014.

Growth Drivers

Thermon Group shares have gained 6.8% since the company reported financial results for the second quarter of the fiscal year 2014 (ended Sep 30, 2013). Adjusted earnings per share in the quarter came in at 30 cents, up 15.4% year over year and above the Zacks Consensus Estimate of 27 cents.

Revenues increased 7.3% year over year, driven by healthy performance in the United States and Canada. Revenues in Europe also stabilized in the quarter. Higher sales were partially offset by increase in cost of sales. Gross margin in the quarter expanded 50 basis points.

For fiscal 2014, management of Thermon Group anticipates revenue to grow in the mid-single digit range.

Also, Thermon Group has an Earnings ESP of +2.50% for fiscal 2014 and a +2.17% for fiscal 2015.

Estimate Revisions Show Potency

Over the last 30 days, the Zacks Consensus Estimate for Thermon Group has increased by 3.4% to $1.20 for 2013. Earnings estimate for years 2013 and 2014 represent year-over-year growth of 31.9% and 15.0%, respectively.

Thermon Group currently has a market capitalization of $885 million and carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include Xylem Inc. (XYL), DXP Enterprises, Inc (DXPE) and Rexnord Corporation (RXN). While Xylem holds a Zacks Rank #1 (Strong Buy), both DXP Enterprises and Rexnord hold Zacks Rank #2 (Buy).

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