Acme United’s Continued Outperformance Justifies Price Target Increase

Acme United Corporation (ACU – $24.60) is a worldwide supplier of cutting devices, measuring instruments and first-aid products for school, home, office, industrial and hardware use.

2016 was another record year for Acme United. Net sales for the year ended December 31, 2016 were $124.6 million, compared to $109.8 million in 2015, an increase of 13%. Net income for the year ended December 31, 2016 was $5.9 million, or $1.64 per diluted share, compared to $4.8 million, or $1.30 per diluted share, for the prior year, an increase of 22% in net income and 26% in earnings per share.

Walter C. Johnsen, the Chairman and CEO of Acme United, gave guidance for 2017 of approximately $137 million in sales (+10% vs 2016), net income of $6.7 million (+14.5% vs 2016), and $1.78 earnings per share (+8.5% vs 2016). In addition, Mr. Johnsen recently said at the Disruptive Growth & Healthcare Conference in New York that he feels that revenues of $160 million for 2018 are very realistic.

Part of that growth will be derived from the recently acquired Spill Magic Inc. The cutting edge manufacturer of absorbents, had revenues in 2016 of $6.3 million and EBITDA of approximately $1.4 million, making it accretive from day one.

Also Acme’s other brands are performing well. Westcott is offering new school, home and office products, such as glue guns with ceramic coatings that are ideally suited for the craft, office and shipping work places. It has new heavy duty pencil sharpeners with proprietary titanium blades for the school market and it’s expanding the line of ceramic box cutters for heavier duty use.

The first aid division recently introduced an app, which allows customers to reorder first aid supplies in a quick, convenient and user-friendly matter. It received lots of positive responses at the National Safety Council Show, where it was first shown to the public.

Clauss, Cuda, Camillus and DMT products will continue to benefit from expanded distribution in the mass market and specialty stores.

Download the fourth quarter 2016 Acme United Company Report. Download Advice: BuyPrice Target: $59.86Latest Company Report (pdf)
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