MTS SYSTEMS CORP. $54 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.7 million; Market cap: $847.8 million; Priceto- sales ratio: 1.6; Dividend yield: 2.2%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that manufacturers use to test the behaviour of materials, machines and structures. This helps them reduce errors and costs.
The stock has moved up from $37 in June 2012. That’s mainly because rising car sales have prompted automakers to spend more on testing systems. Increasingly strict car emission and safety regulations are also fuelling MTS’s sales.
In its fiscal 2013 first quarter, which ended December 29, 2012, MTS’s revenue rose 6.7%, to $142.7 million from $133.7 million a year earlier.
Sales of testing equipment, which account for 80% of MTS’s total sales, rose 11.5%. However, revenue at the sensors division (20% of sales) fell 14.0% as the uncertain economy prompted manufacturers to buy less of this gear.
Even with the higher revenue, earnings fell 11.3%, to $13.8 million or $0.87 a share. A year earlier, MTS earned $15.5 million, or $0.98 a share. That’s mainly because it completed several less profitable contracts.
The company has no long-term debt and holds cash of $47.9 million, or $3.06 a share. That gives it plenty of flexibility to buy back shares or increase its $1.20- a-share dividend, which yields 2.2%. The stock trades at a reasonable 13.8 times MTS’s projected fiscal 2013 earnings of $3.90 a share.
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