The company pleased the Street last week, when it announced fiscal Q4 EPS of 63 cents and revenues of $117.8 million. Analysts had been looking for 44 cents and $113.6 million. Management also guided 2008 EPS to $2.72-$2.78 ($2.28 consensus) and 2008 revenues to $500-$515 million ($500.6M consensus). The CEO attributed the solid guidance to sizable bookings received in recent weeks on key programs. AG Edwards, Needham and Collins Stewart subsequently reiterated "buy" ratings on the issue. CMTL shares popped on the news and have since moved into a bullish "pennant" consolidation pattern. 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 three "strong buys" and three "buys." Analysts see a 17% average annual growth rate, through the next five years. The CMTL P/E ratio (21.82), PEG ratio (1.28), Price to Sales ratio (2.83), Price to Book ratio (3.63), Price to Free Cash Flow ratio (16.35), Sales Growth rate (17.56%), EPS Growth rate (40.00%), Operating Margin (19.05%), Net Profit Margin (14.63%), Return on Assets (12.89%), Return on Investment (15.82%) and Return on Equity (21.74%) compare favorably with industry, sector and S&P 500 averages. About 95% of the outstanding shares are held by institutional investors. The stock is one of those used to calculate the S&P 600 SmallCap Index. Over the past fifty-two weeks, it has traded between $32.45 and $54.75. A stop-loss of $46.25 looks good here.

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