Price Target Increase for Acme United Thanks to Record Q2

Acme United (US: ACU – $38.41) is a leading consumer products company with a focus on first aid and safety products, as well as cutting solutions, for commercial and industrial markets worldwide. The Company reported record sales and earnings for its second quarter ended June 30, 2021.

Acme’s net sales for the second quarter were $44.8 million compared to $44 million in 2020, an increase of 2%. Net income for the second quarter, excluding the impact of the PPP loan forgiveness (also see Financials)*, was $3.7 million or $0.94 per diluted share compared to net income of $3.2 million or $0.92 per diluted share for the same period of 2020, an increase of 16% in net income and 2% in EPS.

* On June 9, 2021 the Company’s PPP loan of $3.5 million was fully forgiven by the Small Business Administration (SBA), and that amount was remitted by the SBA to the company’s lender, HSBC Bank USA, NA. As a result, net income for the second quarter including the loan forgiveness was $7.2 million, or $1.82 per diluted share.

Sales in Canada surged 68% in the second quarter due to strong back-to-the-office sales and the impact of First Aid Central. In Europe, sales grew 26% in Q2 thanks to strong back-to-school, back-to-the-office and craft tools demand.

Although Acme United didn’t provide any guidance, new orders stay strong and it anticipates a strong performance for the full year. Moreover, the Company continues to seek acquisitions that expand its product line and customer reach.

Acme United‘s strong financials make it possible for it to continue paying its attractive quarterly dividend. Traditionally the Company increases the amount by 1 cent every 6 to 8 quarters. In fact, Acme increased its dividend from 12 to 13 cents late 2020.

We reiterate our buy recommendation for Acme United Corp. with a price target of $63.77, which is 66% above today’s stock price.

Download the second quarter 2021 Acme United Company Report.
Smallcaps.us Advice: BuyPrice Target: $63.77Latest Company Report (pdf)
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