LCA-Vision helping clients see the light

It's not immediately obvious that shining a laser beam into a person's eye might help correct their vision. That's how it happens, though, when a trained ophthalmologist is working the beam. If you need help along that line, there is a firm in Cincinnati, Ohio that would be glad to show you the light.

LCA-Vision (NASDAQ:LCAV) operates sixty laser vision centers for the correction of nearsightedness, farsightedness and astigmatism. Procedures treat vision problems by reshaping the cornea with computer-guided excimer lasers. The firm also offers photorefractive keratectomy, another corrective procedure. The centers are staffed by ophthalmologists, who perform the procedures, and optometrists, who carry out the pre-procedure evaluations and post-procedure follow-ups. LCA-Vision expects to open twelve to fifteen new centers this year.

The firm pleased investors earlier in the week, with word of solid quarterly numbers. It reported Q4 EPS of 34 cents and revenues of $58.8 million. The Street had been expecting 25 cents and $58.5 million. Management then predicted FY07 EPS of $2.05-$2.15 ($2.02 consensus). The share price popped on the news and has since been defining a bullish "flag" consolidation pattern. Stocks frequently exit flags 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 two "strong buys", two "buys" and four "holds". Analysts expect a 21 percent average annual growth rate, through the next five years. The LCAV PEG ratio (1.27), Sales Growth rate (26.09%), Operating Margin (22.18%), Net Profit Margin (14.91%), Return on Assets (22.94%), Return on Investment (25.43%) and Return on Equity (27.30%) compare favorably with industry, sector and S&P 500 averages. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past 52 weeks, it has traded between $29.90 and $58.25. A stop-loss of $40.65 looks good here.

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