Price Target Increase for Acme United Thanks To Record Results and Strong Outlook

Acme United (ACU – $16.72) reported record sales and earnings in its second quarter thanks to significant internal growth and a nice contribution from First Aid Only, the new first aid brand, which was acquired in June.

Next to the addition of First Aid Only, Acme also launched an entire line of fishing knives and tools in the second quarter under the new brand Cuda. About 30 tools, specifically designed for rigorous inshore, offshore and freshwater fishing, were shown to the public for the first time at ICAST. Similar to what Camillus did with Les Stroud, Cuda partnered with six professional fishermen who will use the Cuda tools on their popular TV shows. The tools are expected to be in stores in the fourth quarter.

Walter C. Johnsen, Acme United’s Chairman and CEO, noted that the third quarter already looks good thanks to First Aid Only and a strong order flow from the other brands. Moreover, many products are in the pipeline and positive results are expected from the new Cuda fishing tools in the coming quarters.

The Company increased its sales guidance for 2014 from between $97 and $102 million to $108 million. And for 2015, Acme expects to achieve revenues of between $125 million and $130 million.

Looking at the economic picture, Acme’s internal growth and the exciting new products that will enter the market during the remainder of the year, we expect the Company to at least reach the high end of its earnings estimate.

Based on these calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $26.04, which is 55% above today’s stock price. This is an excellent time to add shares of Acme United to your portfolio.

Download the second quarter 2014 Acme United Company Report. Download Advice: BuyPrice Target: $59.86Latest Company Report (pdf)
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