Demand for smart grids boosts Telvent

SEVILLE, SPAIN - The Spanish company Telvent is finding U.S. stimulus funding of utilities very stimulating.

Spanish IT and engineering company Telvent helps make things run more efficiently. Its products are used by electric utilities to optimize power grids and by public transportation to make buses and trains run in harmony.

The Seville-based firm finds customers in the transportation, agriculture and environmental sectors. But it's the electrical part of its business that is, shall we say, electric.

The Obama administration has awarded $3.4 billion for funding smart-grid projects. Utilities that are Telvent customers have got their hands on $1.5 billion of that.

The company also has contracts with utilities in China and Finland.

Other parts of Telvent's business haven't grown as much, but the optimization business is providing investors with reliable growth.

The company should finish the year with four straight years of earnings growth and an IBD EPS Stability Rating of 10 on a scale of 1 (best) to 99 (worst).

The stock was hammered during the financial crisis, losing nearly three-quarters of its value. But it's shown strength coming back, soaring to an all-time high. It broke out of a base near the end of November and has made progress since then.

In the latest quarter, earnings were 46 cents a share, a 44% increase from the year-earlier quarter. That beat estimates by 5 cents. Sales rose 20%, its best result in a year.

Analysts surveyed by Thomson Reuters are forecasting 2009 earnings of $2.12 a share, a 15% increase from 2008. For 2010 they expect $2.50, an 18% increase.

After-tax margin is narrow, 5.6% in the latest quarter. That's down from 7.3% three quarters ago.