EPS of $0.14 missed estimates of $0.15 and sales of $51.66M missed estimates of $54.1M. Sales grew 14% year-over-year, its gross margins expanded to 30.5% from 28.3% for the same period in the prior year, and its adjusted EBITDA grew modestly. For the full-year, it demonstrated robust strength with 18% sales growth, a 21% increase in its backlog, and its Adjusted EBITDA grew 27%. It is up 60% year-to-date, 122% over the past year, but this has been supported by its fundamentals, with a nice expansion in margins and topline growth. It trades at 31X forward earnings, which has expanded over the years.
Much of this move is a combination of fundamental-based, multiple expansion, and a strong industry and macro backdrop (government initiatives to increase defense spending, etc.).
We think that it can continue its run, but at 31X forward earnings, its upside through multiple expansion may be more limited now, and we think some consolidation can be expected at some point. We would be OK slowly averaging in here, while acknowledging that it is a small-cap name.