Why Acme United Remains a Safe Investment, Even at Uncertain Times

The PhysiciansCare hurricane preparedness kit

The PhysiciansCare hurricane preparedness kit sold extremely well during the third quarter at one of the largest do-it-yourself chains in North America.

For the third quarter ended September 30, 2011, Acme United (ACU – $9.44) recorded sales of $19.0 million, compared to $16.1 million in the third quarter of 2010, an increase of 18%. Net income for the third quarter of 2011 was $682,000, or $.22 per diluted share, compared with $612,000, or $.19 per diluted share, for the same period last year, an increase of 11% in net income and 16% in diluted earnings per share. Revenues in the third quarter were especially supported by high demand in the first aid products category and by strong back to school sales.

For the following quarters, results for the European segment should continue to improve thanks to cost reductions and an intensified focus on mass-market sales. Furthermore, we expect continued growth in the Asia Pacific region and more cross-selling opportunities between Pac-Kit and PhysiciansCare.

Next to rising revenues and earnings, increased distribution and new product introductions, Acme United’s growth story is also supported by a 7 cents quarterly dividend, which at today’s share price is an annual yield of almost 3%. This is why Acme remains a safe investment, even at uncertain times.

Our sales estimate for fiscal year 2011 remains $72 million. Because taxes are slightly higher than expected, we now estimate earnings per share to reach between $0.95 and $1.00 per share for the year, up significantly from $0.81 in fiscal year 2010. We reiterate our buy recommendation for Acme United Corp. with a short term price target of $12.21, which is almost 30% above today’s stock price.

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For important disclosures, please read our disclaimer.

For important disclosures, please read our disclaimer.

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