) soared to a 52-week high of $30.25 on December 12, shortly after
the company reported its third straight quarter with a positive
earnings surprise. This Zacks #1 Rank (Strong Buy) developer of
infection prevention and control products has potential for a
growth investor, given its long-term expected sales growth rate of
10.9%, its robust portfolio, several strategic initiatives and an
uptrend in earnings estimates.
Cantel Medical kicked off fiscal 2013 with a strong first-quarter
report on December 6. Earnings per share of 35 cents beat the Zacks
Consensus Estimate by 25% and jumped year over year by 52.2%.
Total revenues of $99.7 million were almost in line with the Zacks
Consensus Estimate and displayed a healthy 6.9% year-over-year
growth. Despite some sales disruptions due to Hurricane Sandy, the
sales growth came from a balanced performance across the three
major business segments.
Cantel Medical identified three major profit boosters that should
further drive performance in the upcoming quarters. The foremost of
its successful strategies was to develop and promote higher-margin
products in all of its major businesses. This positive mix shift
resulted in a huge 320 basis point (bps) expansion in the company's
gross margin to 43.9% during the last reported quarter. The other
two profit accelerators were the successful integration of acquired
businesses and disciplined expense control.
Earnings Estimates Moving Up
The Zacks Consensus Estimate for fiscal 2013 has increased 15.6%
over the past 30 days to $1.48 per share, as both estimates were
revised upward. For fiscal 2014, the Zacks Consensus Estimate has
gained 10.0% to $1.65 over the same time frame, as both estimates
again headed higher. This indicates year-over-year growth of about
Cantel Medical is currently trading at a forward P/E of 20.05x, a
1.6% discount to the peer group average of 22.35x. The
price-to-book ratio is 2.82x, a 15.6% discount to the peer group
average of 3.26x. Similarly the price-to-free-cash-flow ratio looks
attractive at 17.26x, a roughly 14.3% discount to the peer group
average of 19.73x.
Chart Shows Strength
A quick look at the chart shows what aggressive investors are
really looking for. Cantel Medical's price performance has been
reasonably strong with the chart showing a rising trend (except a
few minor pull backs). Particularly, following the release of its
fiscal first-quarter results, the stock showed a steep uptrend and
is currently trading above both its 50- and 200-day averages.
Headquartered in Little Falls, New Jersey, Cantel Medical engages
in the development, manufacture, and distribution of infection
prevention and control products and services in the healthcare
market. The company's major products include water purification
equipment, sterilants, disinfectants and cleaners, specialized
medical device reprocessing systems for endoscopy and renal
dialysis, and disposable infection control products primarily for
dental and GI endoscopy markets. The company has a market
capitalization of $777.8 million.
Other Zacks #1 Rank (Strong Buy) medical devices stocks include
) and Merit Medical Systems (
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