LSI Industries (NASDAQ:LYTS) shares surged more than 20% after beating revenue and earnings estimates for the second quarter of FY2018. Despite the latest rally, LYTS stock declined 26% in the last twelve months with the 52-week trading range $4.99-$10.68. After an earnings announcement, its share volume increased to 242,232, up significantly from the average daily volume of 81,321.
The company’s revenue of $92.31 million has beaten analyst’s consensus estimate by $3.46 million. In addition, its revenue increased 8% in Q2, thanks to a strong growth in LED sales.
LSI Industries has also topped analysts’ consensus earnings estimate by $0.05 per share. In the second quarter, the company generated earnings per share of $0.12 per share, up $0.02 per share from the same period last year.
Dennis W. Wells, Chief Executive Officer, and President commented, “We communicated previously our efforts to intentionally shift away from low margin, conventional technology sales opportunities, instead focusing almost exclusively on LED and other technology solutions. Our LED sales in Q2 increased 25% versus Q2 prior year and now represent 92% of our lighting product sales.”
The company is working on four key strategies to generate a sustainable growth in revenues and earnings. These strategies include: achieve value for its investments in new products and technology; focus on higher quality sales growth opportunities; continue to drive productivity and cost control initiatives and strengthen and leverage our service capabilities.
Its strong performance in the latest quarter clearly demonstrated that its business strategies are working. Along with the strong growth in sales, its gross margin in the second quarter increased 160 basis points over the past year period. On the back of its investment strategies, the company expects its revenue and earnings to generate a sustainable growth in the following quarters.
LSI Industries also announced a quarterly dividend of $0.05 per share, representing the management’s confidence in the future cash generation potential. On the other hand, its stock trades at attractive valuations. Its stock is trading around 1.2 times to book value and 0.5 times to sales, when the industry average of 2.8 and 1.9 times, respectively.
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