The Company is a supplier of precision instruments and services. It manufactures weighing instruments for use in laboratory, industrial, packaging, logistics and food retailing applications.
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13 straight positive earnings surprise quarters.
Background Mettler-Toledo is the world's largest manufacturer and marketer of weighing instruments for use in laboratory, industrial and food retailing applications. The company focuses on the high value-added segments of the weighing instruments market by providing solutions for specific applications. MTD also manufactures and sells certain related laboratory measurement instruments, with one of the top three market positions worldwide in titrators, thermal analysis systems, pH meters and lab reactors.
Full Analysis
Mettler-Toledo reported earnings for the Sep 2006 quarter on Nov 2. MTD announced EPS at $1.10 for the quarter, compared with 72 cents in the same quarter last year. The result was also a positive 36% surprise above the consensus earnings estimate. In fact, MTD has a habit of delivering positive earnings surprises, having done so the last 13 straight quarters.
Technical Analysis
For the year, MTD is up a rather modest (compared to most Momentum stocks) 35% while the S&P 500 is up only about 10.5%. This, too, is in character for MTD, as it has outperformed the general market for the last three full years.
Anyone who questions the continued effect of a positive earnings surprise should look at MTD. When the company reported Sep earnings, the stock gapped higher into six-year highs the next day, and closed 10% higher at $74.90 on heavy volume. On Nov 8, MTD again closed at a new high of $76.67 on very heavy trading volume.
In yesterday’s Momentum column we talked a bit about acceleration gaps and how important they are to the Momentum trader. Looking at the chart of MTD again illustrates this. The current uptrend in MTD is now over four years old. Yet powerful positive earnings surprises and explosive market action give proof that the best is yet to come.