Solid Outlook Continues for Acme United After Record Quarters

After achieving the best quarterly sales and earnings numbers in its entire history in the second quarter, Acme United (ACU – $14.57) also set a new third quarter sales record for the period ending September 30, 2013. Strong sales of back-to-school products such as titanium kids scissors and stainless scissors contributed to the success. Sales of first aid kits to both the office and industrial markets were at record levels as well. Moreover, Clauss industrial tools and Camillus knives had an excellent quarter.

The fourth quarter of 2013 looks very strong as well. Camillus knives sales for hunting and Christmas time gifts should be solid, along with new hazard protection kits, and mass market promotions in Europe.

Acme is working hard to upgrade its new Rocky Mount warehouse facility it bought late August. While there will be duplicate operating costs and moving expenses, the Company will begin to realize savings as of next year. Even more importantly, Acme has put its U.S. distribution facilities in one location where it has plenty of room for growth.

The trend of Acme United’s results becoming less seasonal is starting to show more and more. Traditionally sales peaked in the second quarter due to the seasonal nature of the back-to-school market. And although the second quarter remains Acme’s strongest, the other quarters are showing more growth.

The Company is on track to meet its sales and earnings estimates for 2013. To remain on the conservative side though, we will use the low end of the Company’s own guidance, which is $1.20 earnings per share for fiscal year 2013, or approximately $3.99 million, an increase of about 12.4% in earnings per share and 6.7% in sales compared with 2012.

Based on these calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $21.55, which is almost 50% above today’s stock price.

Download your copy of the third quarter 2013 Acme United Company Report.

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