Acme United Begins 2020 On A Strong Note
Acme United (US: ACU – $22.33), the worldwide supplier of cutting devices, measuring instruments and first-aid products for school, home, office, industrial and hardware use, began 2020 on a strong note. It reported net sales for the quarter ended March 31, 2020 of $35.8 million compared to $31.4 million in the first quarter of 2019, an increase of 14%.
First Aid Central, a Canadian first aid and safety supplier, which Acme acquired early 2020, immediately contributed US$1 million in sales in the first quarter. A promising start! The acquisition expanded the Company’s product offerings, global distribution capabilities and online presence. Moreover, it could become a platform of growth and more acquisitions in a fragmented Canadian first aid market.
Net income for the first quarter of 2020 was $1,277,000 or $0.36 per diluted share compared to a net income of $807,000 or $0.24 per diluted share for the same period in 2019. This is a very impressive 58% increase in net income and 50% in earnings per share.
Changes in the economy, demographics, work environments, technology and job structures are creating new safety challenges and bring with them new workplace risks. So it is imperative that companies large and small keep focusing on safety at work. As a result, Acme United’s first aid segment continues to grow. Especially the SmartCompliance cabinets are gaining traction thanks to their convenient automatic replenishment system. Every time the Company places a new SmartCompliance unit, the SafetyHub app is capturing an increasing percentage of the refill business.
Contrary to most other companies, COVID-19 may pose an opportunity for upside for Acme United. First, because the Company has a diversified worldwide supply base, and second because it has a large enough inventory to supply its existing and new clients.
Acme United ‘s solid financial results also make it unlikely that the Company will have to suspend its quarterly dividend as so many companies have in light of COVID-19. This is excellent news for long term shareholders.
We reiterate our buy recommendation for Acme United Corp. with a price target of $35.03, which is 56% above today’s stock price.
|Smallcaps.us Advice: Buy||Price Target: $29.39||Latest Company Report (pdf)|
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