Trinity Biotech - Momentum

Trinity Biotech plc

 (TRIB), which has delivered eight positive earnings surprises in the last ten quarters, is currently hovering around its 52-week high of $12.76 hit on July 16. ADRs of this Ireland-based diagnostic test kits and instrument company have been moving mostly upward since mid-June based on second-quarter results, a growth-oriented guidance and a 50% dividend.  

With a year-to-date return of more than 26% and an attractive valuation, this Zacks #1 Rank (Strong Buy) stock looks like a solid momentum pick.

Second-Quarter Earnings

On July 12, Trinity Biotech reported second-quarter earnings of 19 cents per ADR, which were in line with the Zacks Consensus Estimate and up 11% from last year. Total revenues climbed 7% to $20.8 million, driven by impressive sales in both the clinical laboratory and point-of-care divisions. The Zacks Consensus Estimate, however, was $21.0 million.

Clinical laboratory revenues climbed 7.2% to $16.4 million, while revenues from the point-of-care unit climbed 6.1% to $4.4 million.

Trinity Biotech repurchased more than 175,000 ADRs during the second quarter of 2012 at an average cost of $11.49 per ADR. The company’s most recent dividend of 15 cents per ADR jumped 50% from that paid in 2011.

Guidance Reflects Growth

The company expects to generate earnings of at least 80 cents per ADR in 2012 on revenues of $86.0 million. This marks gains of 10.1% in earnings and 10.4% in revenues from 2011.

Earnings Momentum on the Upswing

The Zacks Consensus Estimate for 2012 rose 3.9% to 79 cents per ADR over the last 60 days. For 2013, the Zacks Consensus Estimate is pegged at 91 cents per ADR, up 8.3% over the same time frame.

The Zacks Consensus Estimate for 2012 reflects a year-over-year improvement of about 13.3%, while 2013 indicates a year-over-year jump of 15.1%.

Valuation Looks Attractive Trinity Biotech’s valuation looks attractive. The company currently trades at a forward P/E of 15.9x, reflecting a huge discount of 60.5% to the peer group average of 40.2x. Also, on a price-to-book basis, ADRs currently trade at 1.7x, a 52.8% discount to its peer group average of 3.6x.

Strong Chart

ADRs of Trinity Biotech have displayed an upward trend since mid-June, barring minor hiccups. The chart reveals that the stock has been consistently trading above its 200-day and 50-day moving average since early March.

Volume is fairly strong, averaging roughly 66K daily. Trinity Biotech has constantly outperformed the S&P 500 since the latter half of April 2012. The year-to-date return for the stock is approximately 26.2%, compared with the S&P 500’s return of 7.7%.

Headquartered in Bray, Ireland and founded in 1992, Trinity Biotech focuses on developing, acquiring, manufacturing and marketing medical diagnostic products. The company, which has a market cap of $268.21 million, serves the clinical laboratory and point-of-care divisions of the diagnostic market. The products are used for the detection of infectious, autoimmune and sexually transmitted diseases apart from diabetes and deficiencies related to the liver and intestine. Furthermore, Trinity Biotech provides raw materials to the life sciences industry. The company, which operates in more than 75 countries across the globe, sells its products through its own sales force in the US, UK, Germany and France. Moreover, it operates through a network of international distributors and strategic partners.

 
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