MENTOR GRAPHICS $26.82 (Nasdaq symbol MENT; TSINetwork Rating: Extra Risk) (503-685- 7000; www.mentor.com; Shares outstanding: 116.1 million; Market cap: $3.1 billion; Dividend yield: 0.8%) is trading at new highs as it sells more hardware and software for improving and speeding up the design of electronic products.
In the three months ended April 30, 2015, the company’s revenue rose 7.9%, to $272.1 million from $252.2 million a year earlier. Earnings per share jumped sharply, to $0.28 from $0.11.
Mentor typically makes about 70% of its profits in its fiscal fourth quarter, which ends January 31. That’s the busiest purchasing period for its customers.
The auto business is one of Mentor’s biggest growth areas because the industry is quickly shifting from mechanical to electronic systems: electronics now make up approximately 40% of a car’s cost. The company’s software lets automakers use less wiring in a car and minimize electromagnetic effects on sensitive components.
The stock trades at 14.4 times this year’s forecast earnings of $1.85 a share.
Mentor Graphics is a buy.
