Zhongpin (NASDAQ:HOGS)

HOGS has been able to put together a series of impressive quarters from both a revenue and EPS standpoint. They have easily exceeded the GeoTeam minimum EPS growth preference of 30%, despite an increase in outstanding shares of over 40%. Return On Equity for 2007 of (10%) was less than the 15% GeoTeam preference. However, based on first quarter results and published estimates the company should be very close to meeting this preference in 2008.

The company has issued a 2008 EPS guidance range of $1.05 to $1.10. This would imply an EPS growth rate of between 11% to 22% , which is below the GeoTeam minimum preference. According to published estimates, EPS growth will start to accelerate in the fourth quarter of 2008 and continue throughout 2009 as additional capacity is added:

"Zhongpin is ahead of schedule in the construction of its western Henan Province facility (Luoyang) which is now expected to begin operations by the end of second quarter of 2008."

Furthermore the company's guidance does not include potential acquisitions:

"we are actively evaluating additional acquisition targets that have to potential to enhance our organic revenue and earnings growth in the future."

(Source: Press, March 12, 2008)

The GeoTeam has overlooked the short-term EPS growth scenario in favor of the longer-term trend and chance for upside surprise.

The GeoTeam currently holds a position in HOGS.