Plastic packaging films maker
AEP Industries Inc.
) has seen its stock price shoot up more than 60% year-to-date,
due, in part, to its buoyant earnings results. Given its commanding
positions in a number of packaging niche markets, strength across
multiple areas, solid double-digit earnings growth projections and
attractive synergies from an acquisition, this Zacks #1 Rank
(Strong Buy) should be attractive to aggressive growth investors.
A Solid Growth Pick
AEP Industries posted strong second-quarter fiscal 2012 results on
June 11, delivering a staggering 123% positive earnings surprise.
The New Jersey-based company logged earnings of 87 cents per share,
which trounced the Zacks Consensus Estimate of 39 cents. Revenues
advanced 19% year over year to $296.7 million, aided by a higher
selling price and sales volume, as well as last year's acquisition
of Webster Industries.
Operating income nearly tripled year over year to $12.7 million,
supported by improved efficiency and cost control measures. The
company expects synergies from the Webster buyout to continue
driving its results moving ahead. The acquisition has enabled it to
reinforce its foothold in the private-label plastics market.
Estimates Moving Higher
The Zacks Consensus Estimate for fiscal 2012 has climbed 46% over
the last 30 days to $1.64 per share, indicating an estimated
annualized growth of roughly 142%. For fiscal 2013, the Zacks
Consensus Estimate rose by 28% over the same timeframe to $2.79 per
share, marking a projected year-over-year growth of nearly 70%.
AEP Industries trades at a premium to its peers by most metrics.
Its trailing twelve months P/E of 29.28x is well above the peer
group average of 17.43x. Moreover, the stock it currently trading
at a forward P/E of 27.59x, representing a roughly 73% premium to
the peer group average of 15.96x. The price-to-book of 4.47x is
also much higher than the peer group average of 1.79x. However,
given the strong earnings trajectory, the premium valuation should
not scare investors away.
Chart Showing Potential
The price and consensus chart shows that the earnings estimates
lines have been mostly above the stock price. While there have been
a few waxes and wanes in estimate revisions, the stock has begun to
catch up with the rising earnings estimates of late, signaling the
potential for further upside. On the performance front, AEP
Industries has clearly outstripped the S&P 500 over the past
year, yielding a year-to-date return of 62% versus 8.96% for the
Founded in 1970, AEP Industries Inc. is a manufacturer of plastic
packaging products in North America. The company, which has a
market cap of roughly $252 million, makes and distributes an array
of polyethylene, polyvinyl chloride and polypropylene flexible
packaging products for consumer, industrial and agricultural
applications. AEP Industries has manufacturing facilities in the
U.S. and Canada, and markets its products directly as well as
through distributors to end-users.
AEP INDS (AEPI): Free Stock Analysis Report
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