Fabulous First Quarter

DigitalGlobe reported first quarter earnings per share (EPS) of 8 cents, beating the Zacks Consensus Estimate by a whopping 700.0% and significantly bettering last year’s loss per share of 3 cents.

Revenues grew 12.4% year over year to $87.0 million, driven by strong growth in the Telecommunications services business. Revenue strength was boosted by higher sales of defense and intelligence products. Backlog increased 34.0% year over year to $337.7 million.

During the quarter, DigitalGlobe also received notification from the National Geospatial-Intelligence Agency (NGA) regarding full funding for the Enhanced View Service Level Agreement (SLA). The company will receive $250.0 million under the contract by the end of this year.

Upbeat Fiscal Guidance

Based on a solid backlog and contract wins, DigitalGlobe raised its fiscal 2012 revenue growth expectations to 14.0% from 10.0% previously. The company also expects to generate an EBIDTA margin of 46.0%, up from the previously guided 43.0%.

Estimates Going Up

Over the last 90 days, the Zacks Consensus Estimates for 2012 and 2013 advanced by 11 cents and 12 cents, respectively, to 61 cents and $1.03. The estimate for fiscal 2012 represents a significant jump from a net loss in fiscal 2011, while the estimate for fiscal 2013 represents year-over-year growth of 68.9%.

Valuation Looks Reasonable

Considering the company’s growth prospects, its valuation looks reasonable on a P/E basis. DigitalGlobe is currently trading at a P/E of 78.2X, up 574.1% from the peer group average of 11.6X. Besides P/E, the stock is also trading at a forward P/B of 1.36 and a P/S of 1.94, compared with the peer group’s P/B of 0.95 and P/S of 1.04. Continued...