Acme United On Track for Solid Growth in 2017

Acme United Corporation (ACU – $27.70) is a worldwide supplier of cutting devices, measuring instruments and first-aid products for school, home, office, industrial and hardware use.

Acme United’s sales and earnings were down in the second quarter. Oddly enough, the major reason for the decline is the Company’s booming online sales activity. While Acme registered about $15 million in online sales in 2016, which was double from the previous year, they continue to grow at a strong pace.

The order and fulfillment patterns for online sales however are profoundly different compared with brick and mortar store sales. They actually differ so much that a significant portion of Acme’s back-to-school business will be booked in the third quarter instead of the second.

Consequently, the Company expects to more than make up for the decline in the third and fourth quarter. It is confident that it can grow its revenue with more than 20% in the second half of 2017 compared with the same period last year. This means that earnings will most likely increase even more thanks to the operating leverage.

First aid continues to be one of Acme United’s growth drivers. Two weeks ago, the Company officially launched its FAO SafetyHub app, which provides a platform to manage and refill First Aid Only SmartCompliance cabinets. Users can search and scan barcodes on individual first aid products, as well as place requisitions for ANSI & OSHA compliant first aid kits. The app is unique in the industry.

In addition, the Company has recently doubled the productive capacity at DMT. The brand is growing in the United States and in Europe.

As for Spill Magic, Acme aims to expand its distribution into the office channel, in chains such as Staples, Office Depot, United Stationers, or SP Richards. The absorbents could also do well in the industrial market with distributors such as Granger or McMaster-Carr.

More good news was announced last month as the Company increased its quarterly cash dividend with 10% to $0.11 per share. Walter Johnsen said, “This is Acme United’s tenth dividend increase since 2004. The Company continues to make good business progress and we are delighted to provide this additional return to shareholders. Our balance sheet is strong and we are confident in the business.”

Based on our outlook and calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $36.68, which is 32% above today’s stock price.

Download the second quarter 2017 Acme United Company Report. Download Advice: BuyPrice Target: $59.86Latest Company Report (pdf)
For important disclosures, please read our disclaimer.

  • Hi John,

    As usual excellent reviews on all the companies! I have surveyed your complete list of companies, and have found 3 of particular interest currently.

    OBCI PDEX and EVI.

    I own the first two and would buy EVI except I think it is a bit pricey now but it looks very good otherwise.

    Great Job!


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