This Profitable Microcap Quadrupled Earnings Last Quarter
24% revenue growth, 49% operating leverage, and a $50M backlog at 14x forward earnings
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The Setup: A profitable medical device company quadrupled earnings, captured a decade-long supply agreement extension, and sits on hidden strategic investments worth millions.
The market values it at 14x earnings like it’s going out of business.
A critical supplier to robotic knee surgery systems you’ve never heard of.
Makes the precision motors inside surgical tools used in thousands of knee replacements annually.
For over a decade, they’ve been the critical supplier to one of the world’s largest medical device companies.
The psychological torture for investors?
Customer concentration.
One client. 75% of revenue. Every analyst’s nightmare.
Until you realize that “one client” appears to be Medtronic, they just co-developed a next-generation surgical platform, and switching costs could potentially crater an FDA-approved product line.
The stock has 5x’d since 2014. But at today’s price, I believe the setup might be even better.
Here’s what makes this potentially compelling:
Revenue growth: 24% (just posted)
Operating income growth: 49%
Net income: Quadrupled to $9 million
Backlog: $50.4 million
Valuation: 14.7x forward earnings
Hidden asset: Strategic stake in a robotics company Zimmer Biomet is acquiring
They’re already at a $67M revenue run rate. Management guides for continued growth.
The market values the entire company at $115M.
The company is...