MTS Systems Corp (NASDAQ:MTSC)

CAPS Rating: 5 out of 5

A global supplier of mechanical test systems and high- performance industrial position sensors.

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Player Avatar NetscribeNanoTch (62.13) Submitted: 1/24/2007 1:28:34 AM : Outperform Start Price: $34.20 MTSC Score: +48.12

MTS Systems Corporation is a leading supplier of mechanical test systems and high-performance industrial position sensors all over the world. The company’s operations are organized into two business segments namely the Test segment, which provides products, systems, and services for research, and the industrial segment, which provides sensors, sensing systems, and accessories to measure process variables and to automate production processes.

The company recently reported the fourth quarter results for 2006 and it was the strongest quarter, in terms of the revenue for each of the business segment as well as the company as a whole. The company is very strong fundamentally which can be seen by a steady revenue growth with positive operating leverage, high return on invested capital, and strong free cash flows. Lately its strong test and industrial growth has been driven by non-North American markets, which reflect the company’s ability to compete on a global basis.

Along with the large custom systems the company is also channeling its resources towards small-to-medium testing systems of hardware and software. This augurs well for the company as demand for the same has picked up recently. The company has an established management team with a market-driven strategy to grow its business through new product introductions. This can be seen by the introduction of 6 new tests systems in 2006 to tap the increasing demand.

Looking forward, a stable end-market environment and a rise in demand for specialized services is being expected to enhance the prospect of the company in the future. Additionally the pipeline for potential large orders remains healthy, which makes the company’s prospects more bullish. Along with the company’s overall performance moving northwards, its stock is also expected to move in the same direction.

Member Avatar NetscribeNanoTch (62.13) Submitted: 5/15/2007 7:28:55 AM
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MTS systems recently reported a 3% decline in the EPS for the second quarter of 2007 on the back of 1% decline in the revenues as compared to the previous years second quarter. Never-the-less second quarter orders totaled $97.0 million, an increase of 19% compared to orders of $81.5 million for second quarter fiscal 2006, primarily driven by Test segment orders in North America and Asia and worldwide growth in the Sensors segment. This order growth was excellent, following 15% growth in the first quarter providing the company with a solid opening backlog for the second half of the year.

The company has booked additional business from Boeing for structural testing on the new 787 aircraft and won aircraft projects in Poland, Spain and Italy for component and system structural testing in support of Airbus activity. Moreover there is a strong export demand for European manufactured industrial equipment, which creates a pull for the company’s sensors. This can be seen from the fact that the two largest global steel mill manufacturers, companies who typically buy large numbers of sensors to go with new mills, are both reporting that they have a five to six-year backlog of orders, mostly from emerging Asia.

MTS Systems Corporation is a leader in the supply of mechanical test systems and high-performance industrial position sensors all over the world. Along with its market position is more enhanced by the fact that company has a good opening backlog for the second half of the year giving it an upper edge over its competitors. Additionally the expected potential for large orders remains healthy making the prospects of the company more bullish.

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