CMD Cantel Medical Corp

Cantel Medical Corp. (CMN) has been on a roll for the past six months, recently hitting a new multi-year high after reporting a solid Q2 earnings surprise in early March. With the all-time high now in sight and a bullish growth projection, this Zacks #1 rank stock is a solid pick for momentum.

Company Description

Cantel Medical Corp provides infection prevention and control products in the healthcare market and operates in six major segments. The company was founded in 1963 and has a market cap of $451 million.

Although CMN has been jumping higher for most of the last six months, shares got an extra boost on March 9 when the company reported strong Q2 results that came in ahead of expectations.

Second-Quarter Results

Revenue for the period came in at a record $81 million, up 21% from last year. Earnings came in at 33 cents, 6.5% ahead of the Zacks Consensus Estimate, where the company has an average earnings surprise of 6% over the last three quarters.

The good quarter was driven by the company's Endoscope Reprocessing segment, where sales increased 70% from last year on strong shipments of its two newest reprocessors. Cantel's Water Purification unit was also on the upswing, with both sales and earnings climbing from last year.

Financial Profile

The strong earnings momentum has enabled Cantel to strengthen its balance sheet, where the company has cash and equivalents of $16 million and total debt of $27.5 million, down $5.5 million from just last quarter.

Estimates

We saw some decent movement in estimates off the good quarter, with the current year up 2 cents to $1.25 and the next-year estimate adding 8 cents to $1.47, a bullish 17% growth projection.

Valuation

But in spite of the gains, the valuation picture still looks solid, with a forward P/E of 21X in line with the industry average of 20.5X

12-Month Chart

On the chart, CMN jumped higher on the good quarter, hitting a new 52-week high at $26.65 on the news. But in spite of the gains, the stochastic below the chart says that shares are trading well away from over bought territory. Take a look below.

Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Momentum Trader Service.
 
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