Tactile Systems Technology (TCMD) is a Zacks Rank #2 (Buy) that has an A for Value and a C for Growth.  The company develops medical devices for the treatment of chronic diseases at home. Let’s explore more about this company in this Bull of The Day article.

Description

Tactile Systems Technology, Inc. engages in developing and providing medical devices for the treatment of underserved chronic diseases. It provides lymphedema solutions and offers Flexitouch Plus and Entre Plus systems products. The company was founded on January 30, 1995 and is headquartered in Minneapolis, MN.

Earnings History

When I look at a stock, the first thing I do is look to see if the company is beating the number.  This tells me right away where the market’s expectations have been for the company and how management has communicated to the market.  A stock that consistently beats has management communicating expectations to Wall Street that can be achieved.  That is what you want to see.

Tactile Systems Technology (TCMD) has a good earnings history with the company topping the Zacks Consensus in each of the last four quarters.

Over the course of the last four quarters the average positive earnings surprise works out to be 95%.  This means the company is crushing the number nearly every quarter.

The company recently reported an earnings beat on November 4.  EPS of $0.24 was $0.06 ahead of the estimate for a 33% surprise.

Earnings Estimates Revisions

Earnings estimates revisions is what the Zacks Rank is all about. 

Estimates are moving higher for TCMD.

This quarter has moved from $0.31 to $0.33 over the last 30 days.

Next quarter has slipped from a loss of $0.03 to a loss of $0.04.

The full year 2024 has increased from $0.59 to $0.66 over the last 60 days.

Next year 2025, has increased from $0.81 to $0.86 over the last 30 days.

Growth

For fiscal 2024 the company is expected to show 6.7% growth with $292.8M in sales.  Next year analysts are calling for sales of $322M for growth of 10%.  Investors love to see revenue acceleration like this.

Valuation

The forward earnings multiple for this company comes in at 24.7x, which is a little high given the Zacks Style Score for Value is an A.  The value comes in to play on the price to book multiple which stands at 1.8x.  Price to sales is at 1.4 so there is plenty of room to grow.

Margins took a significant hit in the most recent quarter sliding from 11.6% to 6.5%.  Gross margins for TCMD are at 72%, so with an increase in operating efficiency will result in higher operating margins down the road.

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