Myers Industries Inc.
(
MYE
) reported year-over-year earnings growth of more than 40% in its
third quarter, which, along with an acquisition, helped this
polymer products manufacturer become a Zacks #2 Rank (Buy).
Moreover, MYE offers a decent dividend yield of 2.2% and expects to
deliver double-digit earnings growth in 2012 and beyond.
Optimistic Third Quarter
On October 18, Myers Industries reported a 42.9% rise in third
quarter earnings per share to 20 cents, compared to 14 cents a year
ago. The result was in line with the Zacks Consensus Estimate.
Revenues in the quarter grew 3.7% to $197.3 million driven by sales
increases in the Engineered Products (21.6%) and Material Handling
(5.7%) segments, which more than offset the sales decline in the
Distribution segment. Gross margin increased 1.6 percentage points
to 26.7%, due to lower manufacturing costs and higher productivity
during the quarter.
Management expects continued improvement in its businesses in the
fourth quarter and full year. It acknowledged the acquisition of
Brazil-based Plasticos Novel in July for growth in its Material
Handling segment. Furthermore, the company expects that the
acquisition of Illinois-based Jamco Products Inc. will be a key
growth driver for its Material Handling business.
Earnings Estimates Inching Higher
The Zacks Consensus Estimate for 2012 went up 1.1% to 95 cents per
share in the past 30 days, suggesting year-over-year growth of
41.4%. For 2013, the Zacks Consensus Estimate rose nearly 1% in the
same time to $1.10, reflecting year-over-year growth of 15.8%.
Consistently Higher Dividends
Since June 1, 1992, Myers Industries has been consistently paying
dividends with a raise every year except in 2009, reflecting an
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 37.2%. The dividend growth is
also higher than the year-ago level of 7.7%.
Valuation is Expensive but Reasonable
Myers Industries is currently trading at a forward P/E of 15.7x,
which is on par with the peer group average. However, the company's
price-to-book of 2.2x and price-to-sales of 0.6x are at a premium
compared with the peer group averages of 1.1x and 0.3x,
respectively. On the positive side, the company has a 1-year ROE of
13.3%, which is considerably higher than its peer group average of
5.1%.
Myers Industries produces a diverse range of polymer products for
industrial, agricultural, automotive, commercial and consumer
markets. The $500.3 million company grew from a small storefront
distributing tire service supplier to an international
manufacturing and distribution enterprise. 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.
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