MTS SYSTEMS CORP. $75 (Nasdaq symbol MTSC; Aggressive Growth Portfolio, Manufacturing & Industry sector; Shares outstanding: 15.0 million; Market cap: $1.1 billion; Price-to-sales ratio: 2.0; Dividend yield: 1.6%; TSINetwork Rating: Average; www.mts.com) makes equipment and software that manufacturers use to test the behaviour of materials, machines and structures.
In its fiscal 2015 first quarter, which ended December 27, 2014, MTS’s revenue rose 3.0%, to $142.6 million from $138.4 million a year earlier. Overall earnings improved 14.5%, to $13.8 million from $12.0 million. Earnings per share gained 16.7%, to $0.91 from $0.78, on fewer shares outstanding. MTS spends 4% of its revenue on research.
The higher earnings are partly due to a recent restructuring plan that should cut MTS’s annual costs by $6 million.
Roehrig Engineering, which MTS bought for $16.7 million last year, also contributed to the gain. Roehrig has developed an electromagnetic technology that tests shock absorbers and other industrial equipment more accurately than traditional methods.
The stock trades at 19.5 times MTS’s projected fiscal 2015 earnings of $3.84 a share. That’s a high p/e ratio for a firm that serves the highly cyclical automotive and aerospace industries. The $1.20 dividend yields 1.6%.
MTS Systems is a hold.
