Invacare Corp. (IVC) shares are soaring following analyst upgrades and a huge earnings surprise.

Company Description

Invacare manufactures and distributes non-acute health care products. Items included wheelchairs, portable oxygen systems, specialized beds, and many other similar products.

50% Surprise

On Jul 23 the company reported excellent second-quarter results that included improvement in cash flow and earnings. Free cash flow more than tripled to $39.6 million, up from $11.4 million.

Earnings per share came in at 30 cents, 50% higher than the Zacks Consensus Estimate of 20 cents. EPS were also 8 cents higher than the same quarter last year. This was the fourth consecutive earnings surprise.

Estimates Up

Following the report, the Zacks Consensus Estimate for full-year 2009 rose a nickel to $1.41. Forecasts for next year are now averaging $1.56, up 4 cents.

These levels represent 4% and 11% earnings growth, respectively. However, the most recent estimate came in above the consensus at $1.47, and $1.67, which is a bullish signal.

Solid Value to Boot

One share of IVC will cost you just 15 times earnings, a relative value considering the industry average is over 18 times. The PEG ratio is 1.1, about half of the norm for its peers.

The Chart

Following the quarterly report, shares of IVC spiked and formed a new trading range. Since then the stock is well above that level and I am looking for a level of support near the $21 level. Take a look below.

Zacks Investment Research
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