Two Micro-Caps Suggesting Fourth-Quarter Earnings Boost

Micro-Cap Stocks Suggesting Fourth-Quarter Earnings BoostLots of corporate earnings are still streaming in for the third quarter, though mostly among smaller-cap companies. Top-line growth certainly isn’t robust, but it’s not bad either. The surprise I’ve noticed in third-quarter reporting has been the profitability. There has been plenty of double-digit comparable earnings growth on single-digit sales reported.

One micro-cap company that just reported a solid quarterly performance is Blount International, Inc. (BLT).

This Portland, Oregon-based company has been around since 1947 and was first named Oregon Chain Saw Company. Joe Cox, who created the modern-day chainsaw design, founded the company.

Oregon Chain Saw Company was then purchased in 1985 by Blount Incorporated, which was an Alabama-based construction firm. Later, the business was sold to Lehman Brothers Merchant Banking in 1999, which listed the company on the New York Stock Exchange five years later.


In its most recent third quarter, Blount’s sales grew six percent comparatively to $245.2 million, while earnings more than doubled to $16.1 million, or $0.32 per diluted share.

Citing solid demand in virtually all of its business lines, Blount increased its 2014 full-year sales estimate along with adjusted earnings.

Also beating expectations was Planar Systems, Inc. (PLNR), which is another West Coast–based company.This firm manufactures electronic display products and sells mostly to retail, educational, and government customers, as well as utilities and energy firms.

It’s recent quarter produced a 17% increase in total sales to $53.6 million over the same quarter last year.

The company incurred a loss in the comparable quarter, but was able to turn a profit in the most recent quarter at $2.2 million, or $0.10 per diluted share.

Citing improving demand from digital signage and custom industrial customers, management upped its expectations for fiscal 2015. First-quarter fiscal 2015 sales are forecast to be between $55.0 and $58.0 million. This would represent comparable growth of between 36% and 45%, which is significant.Non-GAAP earnings for the company’s fiscal first quarter of 2015 are expected to triple.

Of course, Planar Systems soared after reporting its latest numbers, and the stock is likely to have continued momentum near-term. So, there are plenty of positive corporate results indicating improving business conditions, especially regarding profitability. (See “Two Off-the-Radar Stocks with Record Results.”)

Part of the improvement is due to more modest economic conditions during the third quarter of 2013, which makes the current comparable earnings reporting more robust.

But this is clear evidence of improving business conditions among domestic companies; even large-cap conglomerates posted solid numbers and outlooks going into 2015.

Earnings season is always the best time of the year to hone your market view. Other than monetary policy, corporate reporting is the most material information available to you.

Whether it’s from transportation stocks, restaurant firms, blue chips, or traditional,old economyindustries, countless firms beat Wall Street consensus on at least one financial metric (earnings or revenues) this latest earnings season. The numbers bode well for a solid finish to this year.