On Aug 21, we updated our research report on
Symmetry Medical Inc.
). We are impressed with the company's stable earnings growth since
the beginning of this year. We believe its decision to divest the
OEM Solutions business will bode well.
SMA posted a 60.0% rise in adjusted earnings per share to 16 cents
in the 2014-second-quarter ended Jun 28, 2014, from 10 cents
reported in the same quarter of 2013. Adjusted earnings per share
also surpassed the Zacks Consensus Estimate of 12 cents by 33.3%.
Second-quarter revenues totaled $101.3 million, up 2.3% year over
year, edging past the Zacks Consensus Estimate of $99.0 million.
Revenues were primarily driven by higher sales in the company's OEM
Solutions segment, partially mitigated by a decrease in revenues at
the Symmetry Surgical segment.
SMA announced the sale of its OEM Solutions business to
privately-held Tecomet for $450 million in cash or $7.50 per share
after fees and elimination of outstanding debt. The company expects
the transaction to be completed by the end of 2014.
According to SMA, the proposed sale will recognize the value of the
OEM Solutions business and enhance the growth potential of Symmetry
Surgical, in addition to providing liquidity to shareholders.
SMA's divestment of its U.K. based subsidiary, Clamonta Ltd. on May
22, 2014 was also in sync with its plans to focus on its core
markets and reduce its manufacturing footprint. The divestment will
lead to long-term benefits but negatively affect earnings and
revenues in 2014.
Currently, SMA carries a Zacks Rank #2 (Buy). Other stocks that are
also worth a look from the medical products industry include ICU
Medical, Inc. (
), Abaxis, Inc. (
), and NuVasive, Inc. (
). ICU Medical sports a Zacks Rank #1 (Strong Buy), while both
Abaxis and NuVasive carry a Zacks Rank #2 (Buy).
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