Cost Savings and Sales Growth Initiatives Will Pay Off in Coming Quarters for Acme United

Acme United Corporation (NYSE American: ACU – $17.17) 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 in the third quarter continued to grow, reflecting the success of its Westcott back-to-school scissors, Camillus knives, and first aid products. Also, year-to-year gross margins were comparable.

However, higher selling, general and administrative expenses impacted profitability levels. Severe weather conditions added to the difficulty of the quarter.

As a result of the lower than expected earnings in the third quarter, the Company took decisive steps to reduce annual recurring costs by up to $1.5 million. It is also targeting $1.0 million in inventory reductions in the current fourth quarter. Moreover, Acme expects strong sales growth, as it has launched many new products that should help boost sales in the coming months.

The Company’s goals for the next 18 months are to deliver 5% to 7% organic sales growth, continue to evaluate add-on acquisitions, improve gross margins and reduce selling, general and administrative expenses as a percent of sales. Add some shares to your portfolio at these bargain prices. Better days are ahead.

Based on our outlook and calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $26.67, which is 55% above today’s stock price.

Download the third quarter 2018 Acme United Company Report. Advice: BuyPrice Target: $59.86Latest Company Report (pdf)
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