Strong Growth in 2016 Expected From All Acme United Brands
For 2016 Acme United’s (ACU – $16.75) goals are to grow it revenues to approximately $120 million and its net income to $5.6 million. An increase of 9% and 17% respectively compared with 2015. Growth is expected to come from all brands, which are expanding their distribution and launching new products.
Westcott, for example, will start to see the full impact of the large Office Depot/Office Max scissors account that it picked up last year. In addition, the new iPoint non-stick pencil sharpener should do well as coloring books for adults have become the latest craze.
In addition, Acme recently acquired DMT, a leader in sharpening tools for knives, scissors, chisels, and other cutting tools. In 2015, DMT had revenues of $5.4 million and EBITDA of approximately $1.0 million. Judging by Acme’s plans for the new brand EBITDA may increase significantly this year.
The First Aid Only (FAO) brand has recently been very successful selling SmartCompliance kits to large retailers and banks. Acme has reoriented its sales organization in order to target big national accounts, and that’s paying off. We heard that tests are also ongoing at a major airline to evaluate the kits.
Also in the first aid category, about $500,000 in annual savings will be generated thanks to the Pac-Kit closure and move to Vancouver, Washington.
Finally, the Company is paying an attractive dividend of 10 cents per quarter, which at today’s share price is equivalent to an annual yield of 2.48%. This is substantially higher than the yield on a 10-year treasury bond and also higher than the 2.05% average dividend yield of S&P 500 stocks.
Based on our outlook and calculations, we reiterate our buy recommendation for Acme United Corp. with a price target of $28.89, which is 72% above today’s stock price.
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|Smallcaps.us Advice: Buy||Price Target: $39.52||Latest Company Report (pdf)|
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