MTS Systems Corp (NASDAQ:MTSC)

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.