Barnes Group Inc. - Value
January 08 2012 - 7:00PM
Zacks
Barnes Group Inc. (B) has been growing earnings by the
double digits since 2010. Not too shabby for a 154-year old
company. This Zacks #1 Rank (strong buy) also has attractive
valuations, with a forward P/E of 14.
Founded in 1857 as a spring manufacturer, Barnes
now manufactures a diverse group of products in two business
segments: Precision Components and Logistics and Manufacturing
Services.
It makes custom springs for the automotive and
other industries as well as components for jet engines and
airframes. The company has global customers and operates from 50
locations on 4 continents.
A Dividend Superstar
Barnes is one of those rare, older companies that
is a dividend superstar. It, or its predecessor companies, have
paid a dividend since 1934.
On Oct 20, the company announced it was raising its
dividend by 25% to 10 cents per share. On an annualized basis, that
raised the payout to 40 cents from 32 cents per share.
The dividend is currently yielding 1.6%.
Additionally, Barnes has instituted a new share
repurchase program of up to 5 million shares. It recently completed
the 2008 share repurchase program so the company has a history of
buying back shares.
Barnes Beat By 7.9% in the Third Quarter
On Oct 20, Barnes reported its third quarter
results and surprised on the Zacks Consensus by 3 cents. Earnings
per share were 41 cents compared to the consensus of 38 cents. This
was 52% higher than a year ago when it made just 27 cents.
Sales jumped 12.2% to $325.4 million from $289.9
million in the year ago quarter. Both of its segments saw revenue
growth.
Precision Components saw revenue rise 15% to $176.6
million. Organic sales grew $17.9 million due to increases in North
American and European industrial manufacturing businesses and from
a better performance in the transportation industry, especially
automotive.
Logistics and Manufacturing Services increased
revenue by 9% to $151.6 million. Organic sales rose $10.5 million
due to a strong aerospace aftermarket and North American
distribution businesses.
Expecting Double Digit Earnings Growth for 2011
and 2012
Barnes is scheduled to report its fourth quarter
and full year results on Feb 17. In October, the company expected
revenue to grow 13% over 2010.
Earnings per share are expected to be in the range
of $1.43 to $1.48 which is earnings growth of 51% to 56%.
The analysts are in line with this outlook for 2011
and are also bullish on 2012.
The 2011 Zacks Consensus is up 3 cents to $1.47 in
the last 90 days.
This is earnings growth of 54%.
For 2012, 1 estimate has moved higher in the last
week, pushing the Zacks Consensus Estimate up to $1.75 per
share.
That is further double digit earnings growth of
19.3%.
Barnes is a Value Stock
Like most other stocks, Barnes sold off hard during
last summer's market sell-off but has recovered most of it. Shares
are once again trading near 52-week highs.
But there's still value in the shares.
In addition to a P/E under 15, which is what I use
to measure a "value" stock, Barnes has a price-to-book ratio of
1.8. A P/B ratio under 3.0 usually indicates value.
For value investors looking for double digit
earnings growth in the manufacturing sector, Barnes should be on
the short list.
Tracey Ryniec is the Value Stock Strategist for
Zacks.com. She is also the Editor of the Turnaround Trader and
Insider Trader services. You can follow her on twitter at
traceyryniec.
BARNES GRP (B): Free Stock Analysis Report
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