(CPTS) Conceptus Inc. – 29% Increase in Sales

December 2nd, 2009

Conceptus, Inc (CPTS) is poised for explosive growth over the next couple years and just reported another earnings surprise.

Company Description

Conceptus specializes in women’s healthcare and developed the Essure procedure. The trademarked procedure is an alternative form of birth control that does not use hormones, drugs, or surgery. The body naturally forms a barrier around inserts and prevents conception.

Topped Guidance

On Oct 21 Conceptus reported third-quarter results that included a 29% increase in sales, to $34.2 million. Net income came in at just over $6 million, adjusted to 24 cents per share.

The Zacks Consensus Estimate was just 9 cents, making it the third consecutive earnings surprise. Given the strong quarter, the company also raised guidance for the next quarter.

Estimates Pop

Following the report the Zacks Consensus Estimate for this year rose 12 cents, to 25 cents per share. Next year’s estimate jumped a dime, to 58 cents.

The growth rate for 2009 is a bit skewed considering the company earned just 1 penny last year. However, earnings are expected to rise 128% in 2010.

Industry Comparison

Conceptus is leading ahead of its industry in several key metrics. The company boasts a net profit margin of 5.1%, well above the average of 1.3% for other medical product companies.

The ROE is just over 19%, 3 times the industry norm. All of this is done with much less leverage. Conceptus’s debt-to-equity ratio is 1.4 times, compared to the industry average of 6.8 times.

The Chart

Shares of CPTS were declining for the past few weeks, but momentum has shifted. The MACD crossed over as the stock started to level out. Take a look below.

Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service

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