Acme United Ready for Strong 2016 Thanks to Numerous New Product Launches

In the third quarter, Acme United (ACU – $17.05) achieved record back-to-school sales and record earnings. Especially outstanding sales from iPoint pencil sharpeners, titanium scissors, and first aid kits contributed to the success. In addition, the Company is on course for a new annual sales and earnings record in 2015.

The benefits of the combined purchasing power and the further integration of the three first aid brands will start to have a bigger impact on Acme’s bottom line in the coming quarters. As a matter of fact, the full optimization of the first aid brands will lead to cost savings of up to $1 million in 2016 and beyond.

In addition, the Canadian division has received its Health Safety license, which means it can start to manufacture and assemble its own first aid kits. Also in Europe, Acme expects to receive a similar license early 2016.

Next to the first aid brands, we also foresee growth in 2016 for Acme United’s other brands. Camillus, for example, is gaining market share with its knives, and camping & hunting gear.

At Clauss, a number of market tests with large retail chains are ongoing with strong results so far. As for Westcott, we should start to see the full impact of the large Office Depot/Office Max scissors account for North America that Acme picked up a couple of months ago.

And Cuda has broadened its distribution for 2016 in the United States, Canada and Europe. It now also offers fresh water fishing tools. Backed by the Cuda Pros, who use the Cuda tools during tournaments and on their popular TV shows, big box and sporting goods stores continue to build interest in these high-quality tools. Cuda will soon expand distribution in Canada and Europe as well.

All in all, there are plenty of reasons to be very optimistic about 2016. All of the Company’s brands are launching new exciting products for 2016, which will have a positive effect on revenues. In addition, significant cost savings will be realized with the closure of the Pac-Kit facility.

Based on our outlook and calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $28.67, which is 68% above today’s stock price.

Download the third quarter 2015 Acme United Company Report. Download Advice: BuyPrice Target: $59.86Latest Company Report (pdf)
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