Harbin Electric, Inc. (HRBN) just announced some positive third-quarter numbers that have pushed its share price higher by approximately 6% today. As a result, HRBN is a top-performing Zacks #1 Rank company for Tuesday. Volume is nearing 500,000 shares, which is well above the daily average of nearly 368,000. Analysts have boosted earnings estimates on the company [...]

(HRBN) Top Performer for Tues: Harbin Electric- Zacks #1 Rank Top Performers

Harbin Electric, Inc. (HRBN) just announced some positive third-quarter numbers that have pushed its share price higher by approximately 6% today.

As a result, HRBN is a top-performing Zacks #1 Rank company for Tuesday. Volume is nearing 500,000 shares, which is well above the daily average of nearly 368,000.

Analysts have boosted earnings estimates on the company in the past month, and more upward revisions could be on the way in the coming days.

Harbin Electric is a Chinese company that develops and manufactures a wide array of electric motors with a focus on innovative, customized and value-added products. Major product lines include industrial rotary motors, linear motors and specialty micro-motors.

HRBN is part of the Zacks #1 Rank List under the Machinery-Electrical industry. The only other company from this space that's highlighted is A.O. Smith Corporation (AOS).

Third-Quarter Report

According to Harbin Electric, robust orders in oil pumps and industrial rotary motors in China helped to offset continued weakness in specialty micro motors and overseas sales.

Total revenues climbed 18% year over year to $46.93 million, thanks to growth in the linear motor and industrial rotary motor businesses. (International sales slumped 45% thanks to the tough economies here in North America.)

Adjusted earnings per share reached 40 cents, marking a positive earnings surprise of more than 90% over the Zacks Consensus Estimate. The result also marked a more than 17.5% advance over the previous year's 34 cents.

Harbin Electric has a pretty good record of meeting or surpassing the quarterly Zacks Consensus Estimate. In the past 4 quarters, it has beaten 3 times and matched once, amassing an average surprise of about 30%.

The company called this quarter "yet another significant period on our way to becoming a global leader in the electric motor industry". HRBN expects operating results to remain strong in the fourth quarter.

Acquisition Complete

Also during the quarter, Harbin Electric completed its acquisition of Xi'an Simo Motor Incorporation (now dubbed Xi'an Tech Full Simo Motor Co. Ltd.).

HRBN said the integration and consolidation of Simo Motor's business is moving smoothly. The acquisition is expected to contribute to total operating results beginning next year.

Harbin Electric had stated that the acquisition is the most significant step to date in its strategy to expand to large size and special type of rotary motors. It should also further strengthen HRBN's leading position in the electric motor industry in China.

Earnings Estimates

Earnings estimates on Harbin Electric for both this year and next remain above levels from 30 days ago, probably stemming either from the completed acquisition of Simo Motor on Oct 19, or the announcement of the acquisition on Oct 6.

The Zacks Consensus Estimate for this year is currently at $1.35 per share, marking a gain of 17.4% from $1.15 a month ago. One of 2 covering analysts contributed to this gain.

Meanwhile, the Zacks Consensus Estimate for next year has advanced 22% in the past month to $1.82 per share from $1.49, thanks to upward revisions from 2 of 3 covering analysts. This outlook also suggests that Harbin Electric could put together year-over-year profit growth of nearly 35%.

Zacks Investment Research

Dr. Pepper Snapple Group, Inc. (DPS) reported third quarter results on Nov 5 which surprised on the Zacks Consensus Estimate by 10.20%. It was the fourth earnings surprise in a row.

Earnings per share for the beverage company were 54 cents compared to the Zacks Consensus Estimate of 49 cents.

Net sales, however, fell 4%. The company said it was too early to see the economic recovery translate into higher beverage sales. Liquid refreshment beverage trends remained negative in the quarter.

2009 Guidance

Dr. Pepper Snapple forecasts sales to be in the range of negative 3% to 4%. Earnings per share are expected to be between $1.92 and $1.96 per share.

The current 2009 Zacks Consensus Estimate calls for $1.95 per share.

Value Fundamentals

Dr. Pepper Snapple is a Zacks #2 Rank (buy) stock. It still has attractive value characteristics. It is trading with a forward P/E of 13.5. The company's price-to-book ratio is 2.31. Dr. Pepper Snapple also has a stellar 1-year return on equity (ROE) of 16.1%.

Read the June 11 article.

Update to Previous Value Zacks Rank Buy Stocks

The Andersons, Inc. (ANDE) is scheduled to report third quarter earnings after the bell on Nov 4. Despite a slowdown in the agriculture sector analysts are bullish on the quarter and expect 2009 year over year earnings growth of 23.80%. Read the full article.

Travelers Companies Inc. (TRV) recently raised full year guidance as it surprised on estimates for the third time in the last 4 quarters. The company is trading with a forward P/E of just 8.9. Read the full article.

Harbin Electric, Inc. (HRBN) is growing quickly as it takes full advantage of the Chinese stimulus plan. Harbin has a PEG ratio of just 0.78. Read the full article.

Steve Madden Limited (SHOO) is hot. The company posted record sales in the third quarter and has raised 2009 earnings guidance each of the last 3 quarters. SHOO is attractively valued, trading at 14.2x forward earnings. Read the full article.

Zacks Investment Research

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Zacks Investment Research

Harbin Electric, Inc. (HRBN) is growing quickly as it takes full advantage of the Chinese stimulus plan. Harbin has a PEG ratio of just 0.78.

Company Description

Harbin Electric is a Chinese manufacturer of electric motors, including linear motors, automobile specialty micro-motors and industrial rotary motors. It operates 3 manufacturing facilities in China but has both domestic and international customers.

Acquired Xi'an Simo Motor Group

On Oct 19, the company announced that its subsidiary had completed the acquisition of Xi'an Simo Motor Inc., a rival Chinese electric motor manufacturer with a specialty in industrial rotary motors. Xi'an employs 2,000 people.

Harbin agreed to pay a purchase price equal to no less than 6 times and no more than 8 times the 2008 audited net profits of Simo Motors.

2009 Zacks Consensus Estimate Climbs

Harbin is expected to report third quarter results on Nov 10. Ahead of the number, the third quarter Zacks Consensus Estimate has been holding firm at 31 cents over the last 60 days.

The 2009 Zacks Consensus has jumped 11.3% to $1.28 per share over the last month. Analysts are also bullish on 2010, projecting a 30.98% increase in EPS to $1.67.

Revenue Jumped 60% in the Second Quarter

Despite the continued slowdown in North America in the second quarter, which is where Harbin has the majority of its international business, the company still surprised on the Zacks Consensus Estimate by 22.22%. Earnings per share were 33 cents compared to the Zacks Consensus of 27 cents.

Revenue climbed to $38.36 million from $23.96 million in the second quarter of 2008. Revenue also climbed 25% from the first quarter of 2009.

The company is getting a boost from the Chinese stimulus which helped fuel strong sales of industrial rotary motors. It also received a $1.17 million grant from the Chinese government to support its linear motor driven subway train project.

Value Fundamentals

Harbin Electric is a Zacks #1 Rank (strong buy) stock. It has attractive value fundamentals with a forward P/E of 14 and a price-to-book ratio of 2.34. The company has an tremendous 5-year average return to equity (ROE) of 33.30%.

Zacks Investment Research