Continued Strong Performance Expected for Acme United

Acme United’s (ACU – $21.40) sales in the third quarter, ended September 30, 2016, were $31.9 million, up 7% compared with the same period last year. Net income for Q3 2016 was $1.5 million, or $0.40 per share, a strong increase of 22% in net income and 21% in EPS.

Especially Westcott, the school, home and office products brand, continued to outperform. This year had the best back-to-school performance in the Company’s history. Another strong performer was the first aid business, which gained market share in the industrial and food service segments. There are now SmartCompliance kits in thousands of restaurants in the US. And earlier this year, Wal-Mart equipped each store, warehouse, office, and truck with a first aid kit from Acme United.

Also DMT is doing very well. In the United States, Canada and Europe, customers are enthusiastic about the synergies with tools from other Acme brands, such as Clauss, Camillus or Cuda. Only a few months after the sharpening tools manufacturer was acquired by Acme United, its production had to be expanded to meet demand.

Clauss, Cuda, and Camillus products continue to benefit from expanded distribution in the mass market and specialty stores. For Cuda, new freshwater fishing tools will be launched and several product line extensions, such as carbon fiber gaffs and nets, will be introduced.

For the second quarter in a row, Acme United increased its sales and earnings guidance for 2016. Thanks to an outstanding performance of all its brands in the first nine months of the year, the Company now expects to generate revenues of $124 million and earnings per share of $1.63 in 2016. This is up from the original forecast of $120 million in revenues and earnings per share of $1.47.

Moreover, Acme’s Chairman and CEO, Walter C. Johnsen mentioned during the third quarter conference call that although it was a bit too soon for exact projections, he expects a continued strong performance for the Company going forward.

On top of all that, Mr. Johnsen again indicated that the Company will be looking for more accretive acquisition candidates in 2017.

Based on our outlook and calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $30.81, which is 44% above today’s stock price. Buy recommendation.

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