United Stationers Inc.
) achieved a Zacks #1 Rank (Strong Buy) on October 31, following
impressive third quarter 2012 results with an encouraging
earnings surprise of 8.3%. The company has outpaced estimates in
4 of the last 5 quarters leading to an average surprise of 3.5%
for the same period. Moreover compelling valuation makes this
stock an attractive investment opportunity.
Third Quarter Results
On October 22, United Stationers posted third-quarter earnings
of 91 cents a share, ahead of the Zacks Consensus Estimate of 84
cents. Moreover, earnings increased 12.3% from the year-ago
quarter's earnings of 81 cents. Gross margin expansion and
reduced interest expenses, along with share repurchase
activities, boosted bottom-line results.
The quarter's downside wasthe net sales, which dropped 1.6%
from the year-ago quarter to $1,288.7 million, and also fell
short of the Zacks Consensus Estimate of $1,328 million. However,
sales remained even with the year-ago quarter after adjusting for
one less selling day in the quarter.
Gross profit margin expanded 56 basis points to 15.8% versus
the prior-year quarter due to lower cost of goods sold. Operating
margin remained flat at 4.9%.
Earnings Estimate Revisions
The Zacks Consensus Estimate for 2012 increased 3.8% to $2.70
per share in the last 60 days. The current estimate implies
year-over-year growth of 8.7%. Moreover, for 2013, Zacks
Consensus Estimate increased 4.1% to $3.03 per share, reflecting
an estimated year-over-year growth of about 12.2%.
United Stationers currently trades at a forward
price-to-earnings (P/E) multiple of 11.05 (at par with the peer
group average) and has low P/S and P/B multiples. A P/E below
15.0, a P/S ratio less than 1.0 and a P/B ratio under 3.0,
generally indicate a value stock.
On the profitability front, the stock looks attractive with a
trailing 12-month return on equity (ROE) of 15.8% (above the peer
group average of 11.9%). The company's PEG ratio of 1.0 stands at
par with the benchmark indicator, and has a long-term earnings
growth projection of 11%.
About the Company
Founded in 1922 and headquartered in Deerfield, Illinois,
United Stationers is the wholesale distributor of business
products in North America. The company offers technology products
such as computer supply, peripheral products and computer
hardware items. It also distributes traditional office products
that include filing and record storage products, business
machines, presentation products, writing instruments, paper
products etc. The company also offers industrial supply items,
such as hand and power tools; safety and security supplies;
janitorial equipment and supplies. United Stationers, which
primarily competes with
) has a market cap of $1.20 billion.
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