Columbus McKinnon - Value
Columbus McKinnon Corporation ( CMCO ) is a material handling products maker that recently reported a robust fiscal first quarter, thanks to strong domestic demand. This Zacks #1 Rank (Strong Buy) outperformed the Zacks Consensus Estimate by 59.3% in the quarter, marking its fourth positive earnings surprise over the past six quarters. With a price-to-sales (P/S) ratio of just 0.5, CMCO is a compelling value pick.
Strong First Quarter
On July 19, Columbus McKinnon posted a three-fold year-over-year surge in its profit to $8.4 million for the first quarter of fiscal 2013. Earnings of 43 cents per share crushed the Zacks Consensus Estimate of 27 cents. Improved operating efficiency aided the bottom line growth.
Revenues spiked 9.5% year over year to $153 million on strong demand for its products in the U.S. and healthy order bookings internationally. U.S. sales soared 18.5% to $88.1 million. However, overseas revenues moved lower by 0.7% to $64.9 million due to unfavorable currency exchange swings.
Backlog climbed 11% year over year to $109.9 million. Gross margin increased to 28.6% from 25.5% a year-ago on efficiency gains and higher volume.
The company expects continued growth despite the sluggish global economy. The optimism stems from healthy order backlog and strong demand across its end markets. Columbus McKinnon also expects to benefit from its growth strategies, including acquisitions.
Earnings Estimates on the Rise
One out of three estimates has been revised higher in the last 30 days for fiscal 2013, pushing the Zacks Consensus Estimate up 8.2% to $1.45 a share. This reflects a projected annualized growth of roughly 13.3%.
A True Value Stock
Like many other stocks, Columbus McKinnon's shares tumbled amid last year's summer selloff due to the fears of a slowing global economy. Following that, the stock has bounced back and gained roughly 11% so far this year. With its shares still trading below its 52-week high of $18.02 (reached on Feb 16, 2012), there is much room for upside.
Columbus McKinnon has a lot to attract investors seeking value. In addition to having a low P/S, the stock has a forward P/E ratio of just 10.2. It also has a price-to-book (P/B) ratio of 1.7. (A P/S ratio lower than 1.0, a P/E below 15.0 and a P/B ratio under 3.0 generally indicate value). Moreover, the company has a 1-year ROE of 17.6% which is higher than its peer group average of 14%.
Founded in 1875, Columbus McKinnon Corporation makes material handling products and services for applications across a number of commercial and industrial markets. Its offerings include electric hoists, steel chains, jib cranes overhead cranes, shackles, lifting hooks and ratchet binders. The company, which has a market cap of roughly $285 million, markets its products to general and specialty distributors, end users and original equipment manufacturers (OEMs) under a host of brands.
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