In this update report (pdf) we discuss Acme United’s (ACU – $7.42) first quarter results. We explain why we feel this stock is undervalued at current levels and we give an outlook for the near term future. Underneath are a few highlights from the report:
Even in these difficult market circumstances, the Company was able to gain 5 large mass market industrial and hardware customers during the past two quarters.
ACU is fundamentally very sound with a low valuation, as it has a trailing P/E of 6.61, a price to book of 1.09 and 16.88% Return On Equity.
The Company has implemented a number of cost cutting measures, including incentive pay, travel, telecommunications and legal fees, which will result in annualized savings of approximately $1 million. These savings will not affect the development of next generation products.
Acme United will release a large number of new products in the coming months. There’s a whole line of new pencil sharpeners with titanium blades, cutting tools in the Clauss line with titanium carbonitride coated blades and new non-stick cutting implements.
We remain confident in Acme United’s long term future and are therefore adjusting our 12-month price target from $11.85 to $11.64, only to reflect the lower average industry P/E.
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