Columbus McKinnon Corp.: Since 1875
Forward P/E: 10.9
Earnings Growth: 140%
Projected Sales Growth: 12%
Market Cap: $282 million
Why It's Featured: Earnings up more than 140%; expanding into China and Latin America.
Danger Zones: Needs continued global economic recovery to deliver growth.
Columbus McKinnon Corporation (NASDAQ: CMCO) designs, manufactures, and markets material handling products for commercial and industrial end-user markets in the United States, Europe, Canada, and internationally.
The company offers electric, lever, hand, and air-powered hoists; hoist trolleys; winches; industrial crane systems, such as bridge, gantry, and jib cranes; alloy and carbon steel chains; closed-die forged attachments comprising hooks, shackles, textile slings, clamps, logging tools, and load binders; industrial components, including mechanical and electromechanical actuators and rotary unions; below-the-hook special purpose lifters; tire shredders; and light-rail systems.
It sells through commercial distributors and end-users under various names, including Budgit, Chester, CM, Coffing, Duff-Norton, Little Mule, Pfaff, Shaw-Box, and Yale. The company markets to various industries that include manufacturing, power generation and distribution, utilities, wind power, warehouses, commercial construction, oil exploration and refining, petrochemical, marine, ship building, transportation and heavy duty trucking, agriculture, logging, and mining, as well as to the entertainment industry comprising permanent and traveling concerts, live theater, and sporting venues. Columbus McKinnon Corporation was founded in 1875 and is headquartered in Amherst, New York.
Nothing too sexy about lifts or material handling machinery. Unless profits turn you on. Then you'll want to keep reading.
CMCO has been around since 1875 but only went public in 1996 with an offering made by Goldman Sachs and Bear Stearns at $15 a share. Since then earnings have been, at the kindest, erratic. In 2002, they were negative by 42 cents, then went positive in '03 to 8 cents. In '04, they jumped to 90 cents, then took another leap to $1.77 in '05. Stayed there in '06, then moved up to $2.01. Faltered in 2008 to $1.69, again in '09 to 34 cents. In 2010, they were higher, to 52 cents. 2011 should show $1.24 (fiscal year ended March), then go to $1.34 next year.
Efficient marketing is part of the formula for success at CMCO. It bought South African marketing and distributing company Yale Lifting Solutions last year. It previously had 20% of Yale. The idea behind the acquisition: stronger presence in a mining rich market. Yale should add $10 million to the top line ($590 million last year), and just as important, help CMCO gain more market share in a strong South Africa mining industry.
Fourth quarter results (expected to be 41 cents compared to 20 cents in the last quarter of the previous year) were helped by a more robust domestic economy which increased demand. Manufacturing is one of the more active industries in the recovery. Cost restructuring also helped, especially with margins as higher volumes drove better gross margins. Both U.S. and Europe show increased order flow. Look for China and Latin America to add to volumes this year.
- Essential Numbers:
- Trailing P/E: 13.88
- Price to sales: .50
- Price to book: 1.64
- Operating margin: 6.95%
- Profit margin: 3.56%
- Return on equity: 12.17%
- Return on assets: 5.39%
- Total cash: $82.03 million
- Cash per share: $4.25
- Total debt: $153.7 million
- Debt to equity: 87.27%
- Current ratio: 2.89
- Book value per share: $9.12
- Beta: 2.66
- 52 week change: -23.28%
- Shares outstanding: 19.31 million
- Float: 17.72 million
- Held by insiders: 4.66%
- Held by institutions: 91.1%
- There is no dividend
Some of the above numbers will stop some investors, ones like debt to equity of 87% or a Beta of 2.66. But some of them will draw in investors with a tolerance for risk, ones like the price to sales of .5 or high institutional ownership of 91% or a high current ratio of 2.89. As with all stocks, there's good and bad here. It's all how you perceive the future that makes the difference. For CMCO, the future looks like it's shaping up nicely, especially internationally.
- Company Web site: www.cmworks.com
- Ted Allrich, The Online Investor
April 26, 2012
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