Estimates have been rising for
AMCOL International Corporation
(
ACO
) after the company delivered a strong first quarter earnings beat
on April 27.
It is a Zacks #2 Rank (Buy).
Based on current consensus estimates, analysts project 14% EPS
growth this year and 12% growth next year. On top of this, the
company pays a dividend that yields a solid 2.5%.
And valuation is attractive too, with shares trading at a discount
to their historical median on both a price/earnings and price/book
value basis.
Company Description
AMCOL International Corporation develops and markets a wide range
of mineral and technology based products which are used in various
industrial, environmental and consumer applications. The company
reports revenue in the following 4 segments:
Minerals & Materials (52% of total revenue)
Environmental (21%)
Oilfield Services (23%)
Transportation (4%)
It is headquartered in Hoffmann Estates, Illinois and has a market
cap of $924 million.
First Quarter Results
AMCOL delivered better than expected first quarter results on April
27. Earnings per share came in at 43 cents, beating the Zacks
Consensus Estimate by 3 cents. It was an 10% increase over the same
quarter last year.
Sales rose 8% to $235.8 million, driven by a 7% increase in
Minerals & Materials and a 24% jump in Oilfield Services.
Gross profit expanded 110 basis points to 27.6% of sales.
Meanwhile, operating income increased 16% year-over-year as the
operating margin expanded 60 basis points to 9.1%.
Estimates Rising
Analysts revised their estimates higher for both 2012 and 2013
following strong Q1 results, as you can see below:
This sent the stock to a Zacks #2 Rank (Buy).
The Zacks Consensus Estimate for 2012 is now $2.07, representing
14% growth over 2011 EPS. The 2013 consensus is currently 12%
higher at $2.31.
Solid Dividend
On top of this growth, Amcol pays a dividend that yields a solid
2.5%.
The company aggressively raised its dividend throughout the first
part of the last decade but hasn't increased it since 2008. With
strong earnings growth projections and a very manageable payout
ratio of 35% based on the 2012 consensus estimate, I wouldn't be
surprised to see a dividend hike in the near future.
Reasonable Valuation
Despite strong Q1 results and rising estimates, shares of AMCOL
have pulled back recently along with the overall market. This has
led to some attractive valuations.
The stock trades at just 13.3x 12-month forward earnings, a
discount to its 10-year median of 15.7x. Its price to book ratio of
2.2 is also below its historical multiple of 2.4.
The Bottom Line
With rising estimates, strong growth, a solid dividend and
reasonable valuation, AMCOL offers investors a lot to like.
Todd Bunton is the Growth & Income Stock Strategist for
Zacks Investment
Research
and Editor of the
Income
Plus Investor Service
.
AMCOL INTL CP (ACO): Free Stock Analysis Report
AMCOL INTL CP (ACO): Free Stock Analysis Report
AMCOL INTL CP (ACO): Free Stock Analysis Report
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