The medical device company Cyberonics, Inc. (NASDAQ:CYBX) traded higher by 5.24% this past Wednesday after slightly beating Q1 expectations, recording revenue growth of 19% year-over-year. In addition, the company increased its guidance, which was significantly greater than Street estimates.
Cyberonics, Inc. (NASDAQ:CYBX) markets and develops the Vagus Nerve Stimulation (VNS) Therapy system for refractory epilepsy and treatment-resistant depression. The company has seen substantial growth for the last five years, but many have been anticipating a slow-down.
However, total sales surged 19%, including 27% international growth and 17% U.S. growth. The central issue surrounding this company has been international growth, which is an untapped market. Thus, double-digit growth throughout 2013 seems reasonable, but at 30 times earnings with a price/sales of 5.4, I do think there is probably better value elsewhere. Personally, I don’t think Cyberonics, Inc. (NASDAQ:CYBX) is a lousy company, I just want to see more progress to pay this high a premium.
Large gains might just keep going
Ambarella Inc (NASDAQ:AMBA) is a $450 million company that operates in the semiconductor/video businesses. The company’s success during this last quarter was driven by two markets in particular: Its Internet-protocol security camera and its wearable sports camera. These markets generate higher margins; thus net profit rose 82% year-over-year.
Ambarella Inc (NASDAQ:AMBA) has seen gains of 175% over the last year, yet, it still trades at 3.62 times sales with a P/E ratio of 25. Compared to Cyberonics, Inc. (NASDAQ:CYBX), Ambarella Inc (NASDAQ:AMBA) has 50% better growth and is cheaper relative to fundamentals. In my opinion, Ambarella Inc (NASDAQ:AMBA) is a bargain, and will continue to climb higher.
The quarter looks strong….at first glance!
After Cracker Barrel’s strong quarter, it should come at no surprise that Bob Evans Farms Inc (NASDAQ:BOBE) also performed strongly. The company beat on both the top and bottom line with its net profit growing 23% year-over-year, pushing its stock higher by 3.11%.
When you look at Bob Evans Farms Inc (NASDAQ:BOBE)’ quarter, at first glance, it looks solid, but as you dig deeper, you see a number of weaknesses. For example, the company’s 23% net income increase was only due to a tax benefit, and further covered the losses associated with the sale of its Mimi’s Café business.
The company did see same store sales increase 0.5%, yet overall sales declined 1.3%. In addition, the company actually lowered guidance for its fiscal year. Therefore, it is quite hard to determine why the stock traded higher. Personally, I don’t see anything exciting at Bob Evans Farms Inc (NASDAQ:BOBE) and wouldn’t select it as a preferred investment choice in the restaurant space.
Final thoughts
Of these three stocks that rose on Wednesday, I think Ambarella Inc (NASDAQ:AMBA) is the clear winner. It has the whole package including strong growth, attractive metrics, and room to grow; making it an easy selection.
I will say that I am quite shocked that both Cyberonics, Inc. (NASDAQ:CYBX) and Bob Evans Farms Inc (NASDAQ:BOBE) traded higher after such mediocre quarterly performances; especially Bob Evans Farms Inc (NASDAQ:BOBE). Sometimes, when the market trades higher, a stock will follow despite a weak quarter – but it is exceptionally rare for a stock to move higher when the market trades with such large loss. While I do not understand why this happened with Bob Evans Farms Inc (NASDAQ:BOBE) and Cyberonics, Inc. (NASDAQ:CYBX), I would not mistake the performance for strength, and would be exceedingly careful about initiating a position at current levels.
Brian Nichols has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Brian is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
The article Are These Wednesday Post-Earnings Movers a Buy? originally appeared on Fool.com is written by Brian Nichols.
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