Shares of Solectron Corp. (Nasdaq: SLR) scampered up 2 7/16, or 4 percent, to a 52-week high of 60 9/16 Tuesday, one day after it met analysts' estimates in its third quarter.
Solectron made $75.7 million, or 29 cents a share, on sales of $2.15 billion, matching a First Call consensus estimate for the quarter.
But it was the company's bullish outlook for fiscal 2000 that excited some traders Tuesday morning.
"This stock is trading at a ridiculous multiple right now, but people want to believe in it," said Vernon Essi, an analyst at Adams, Harkness and Hill. "They've done a reasonably good job managing expectations, but I think this stock is overbought."
The stock is currently trading at a price-to-earnings ratio of 61. The stock split 2-for-1 in February and has made decent gains in the ensuing three-and-a-half months.
Essi said during the post-earnings conference call, Solectron officials implied that it would have no problem exceeding the First Call consensus estimate of $1.44 a share in fiscal 2000.
"They did have a good quarter this time," Essi said. "But everyone has already forgotten that last quarter's results were really a stretch. They would've missed if it weren't for adjusting the tax figures a bit."
The $2.15 billion in sales represents a 68 percent jump versus the year-ago period when it earned $49.2 million, or 20 cents a share, on sales of $1.28 billion.
"I am pleased to report another record-breaking quarter, made possible by the stellar performance of our associates, combined with the accelerating shift toward outsourcing by our customers' requiring fully-integrated and optimized supply-chain solutions," said CEO Ko Nishimura in a prepared release.
Solectron shares moved up to a 52-week high of 60 earlier this month after falling to a low of 17 11/16 last June.
Thirteen of the 19 analysts following the stock maintain either a "buy" or "strong buy" recommendation.
First Call consensus expects Solectron to earn 32 cents a share in its fourth quarter.
"I didn't walk away from the conference call banging on the table for this stock," Essi said. "Solectron always seems to get the benefit of the doubt.">