Through The Fly's Eyes: LSI Industries

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.













LSI Industries: Pretty IS Better

When you have products to sell, the look of your site can make all the difference. There is an outfit headquartered in Cincinnati that can upgrade that look with a wide variety of lighting and graphics enhancements. One of its subsidiaries was responsible for the Nasdaq Marketsite video screen, the world's largest.

LSI Industries (LYTS) provides graphics and lighting products and services to the commercial, industrial and multi-site retail markets. The Lighting segment manufactures and markets outdoor, indoor and landscape lighting. The Graphics segment provides exterior and interior visual image elements related to graphics and menu board systems. The Technology segment designs, produces, and supports light engines and large format video screens using LED technology. Clients include BP plc (BP), Best Buy (BBY), ConocoPhillips (COP), Exxon Mobil (XOM), Ford Motor (F), McDonald's (MCD) and Yum! Brands (YUM).

Investors were pleased last week, when the company issued guidance for its fiscal fourth quarter. Management now sees EPS of 27-29 cents and revenues of $89-$93 million. Those ranges topped the consensus analyst estimates of 23 cents and $83.59 million. The CEO also noted, "We are currently in the early stages of several high-volume rollout programs that bode well for fiscal 2008." LYTS shares popped into a bullish "pennant" consolidation pattern on the news. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with one "buy" and three "holds". Analysts see an eighteen percent growth rate, through the next year. The LYTS P/E ratio (20.92), Price to Sales ratio (1.21), Price to Book ratio (2.22), Price to Cash Flow ratio (14.28), Sales Growth rate (16.77%), Return on Assets (9.22%) and Return on Investment (11.25%) compare favorably with industry, sector and S&P 500 averages.

Institutional investors hold about 73 percent of the outstanding shares. Over the past 52 weeks, the stock has traded between $12.83 and $20.81. A stop-loss of $15.50 looks good here. Note that the firm is next expected to report quarterly results in late August.