Despite challenging economic conditions,
Myers Industries Inc.
) saw strong second-quarter earnings growth of 21.4%, resulting in
upward earnings momentum in the last month. This polymer products
manufacturer is a Zacks #2 Rank (Buy) and offers a dividend yield
of 2.0%. The company is expected to deliver double-digit growth in
earnings in 2012 and beyond.
Challenging but Promising Second Quarter
On July 19, Myers came out with second quarter earnings of 17 cents
per share, which was in line with the Zacks Consensus Estimate and
above last year's 14 cents.
Revenues grew 2.2% to $181.1 million. The increase was attributable
to strong sales in the Engineered Products segment and moderate
sales in the Lawn & Garden segment, which more than offset
lower sales in the Material Handling and Distribution segments.
Although the company's earnings are expected to be hurt by the
sluggish economy, the company believes that the shifting of orders
from the second quarter to late 2012 will result in a solid
performance for the full year.
Acquisition of Plasticos Novel
On July 9, Myers completed the acquisition of Plasticos Novel, a
leading designer and manufacturer of plastic totes and crates used
for the fast growing food and agriculture industries in Brazil.
Novel will complement Myers' material handling business in Brazil
and fulfill its target of expanding in North and South America.
Novel's annual sales are projected to be $38 million in 2012.
Earnings Estimates Edge Upward
Following the announcement of the Novel acquisition and its
second-quarter results, three of 4 estimates for 2012 have been
revised upward in the last 30 days, pushing the Zacks Consensus
Estimate up by a penny or 1.1% to 92 cents.
The Zacks Consensus Estimate for 2013 stayed at the same level of
$1.08, despite 2 of 4 upward revisions in the same period. The
estimates for 2012 and 2013 represent expected annualized growth of
37.3% and 17.7%, respectively.
Consistently Higher Dividends
Since June 1, 1992, Myers has been consistently paying dividends
with a raise every year (except in 2009), reflecting its efficient
management policy and sound financial position. The company last
raised its quarterly dividend on March 5 by 14.3% to 8 cents,
representing a payout ratio of 40.0% and a yield that is higher
than its trailing 12-months average dividend yield of 1.90%. The
dividend growth is also higher than the year-ago level of 7.7%.
Valuation: Expensive but Reasonable
Myers is currently trading at a forward P/E of 17.0x, a 25% premium
to the peer group average due to its strong earnings growth
trajectory, mainly based on expansion strategies. Apart from P/E,
Myers' price-to-book of 2.4x is higher the peer group average of
1.1x. The company also has a 1-year ROE of 12.9%, which is
significantly better than its peer group average of 4.0%.
Chart Looks Promising
The price and consensus chart reveals that the stock has cut across
the 2012 earnings estimate line after hovering below it before
December of last year. The stock has started catching up with the
2013 estimate line, which implies that it is likely to steer ahead
given the rising estimates.
Despite a soft economic outlook, Myers is likely to continue
outgrowing its peers based on its strategic expansions, cost
control and productivity improvements. Furthermore, with stable
earnings estimates, a solid dividend yield and a reasonable
valuation, the stock is definitely a good choice for investors
seeking both growth and income.
Founded in 1933, Akron, Ohio-based Myers Industries produces a
diverse range of polymer products for industrial, agricultural,
automotive, commercial and consumer markets. As of March 1, 2012,
Myers operated 16 manufacturing facilities, 24 sales offices, 4
distribution centers and 6 distribution branches located in North
America, Central America and South America.
MYERS INDS (MYE): Free Stock Analysis Report
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