Tuesday, August 7, 2007

Eagle Test Systems Inc.

Eagle Test Systems Inc. is a NASDAQ listed security that has been trading in a range between $13.50 and $20.70 over the past year. With 22,959,490 shares outstanding, a recent price of $14.98 gives a total market capitalization of $346,458,708. While there are certainly larger companies, Eagle Test Systems Inc. has definitely earned its place in the pack. Last year, Eagle Test Systems Inc. created $1.15 in earnings for every share outstanding.

Eagle Test Systems Inc. is currently priced by the market at 13.00 times last year’s earnings. Many trading multiples around the world are quite attractive these days, but don’t be fooled. A Price to Earnings ratio of 0 simply means that the security didn’t make any money last year.

With a share price under $50 a share and earnings per share in excess of $1 a share, Eagle Test Systems Inc. could be an interesting value proposition. Consistent earnings are the key to high valuations and this security is well on its way.