Robust First Quarter and 2014 Outlook for Acme United

Acme United (ACU – $16.75) started the year on the right foot. First quarter sales and earnings showed strong growth. And more is expected for the coming quarters as many new products such as Camillus hunting, fixed blades and folding knives are ready to launch later this year.

The Company’s balance sheet is strong. Its current loan agreement provides for borrowings of up to $40 million, while its long term debt is slightly over $17 million. Leaving plenty of room for acquisitions. Walter C. Johnsen, the Company’s Chairman and CEO, mentioned that the Company could handle an acquisition with revenues between $15 and $20 million.

During the first quarter, Acme successfully completed the consolidation of its U.S. warehousing operations into the new Rocky Mount, North Carolina facility. The lease on one former warehouse has been terminated and a second warehouse was sold for $850,000. The move to Rocky Mount generates operating and freight efficiencies.

During the first quarter earnings conference call, Mr. Johnsen confirmed the Company’s 2014 sales and earnings guidance. Sales are expected to reach $97 to $102 million, an increase of 8% to 14% respectively. Earnings for 2014 are estimated between $4.3 million and $4.6 million, an increase of 3% and 9% respectively.

Based on these numbers, we reiterate our buy recommendation for Acme United Corp. with a price target of $24.44, which is 45% above today’s stock price.

Download your copy of the first quarter 2014 Acme United Company Report.

Smallcaps.us Advice: Buy	Price Target: $59.86	Latest Company Report (pdf)
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