Stock Buy: Quaker Chemical Corp.
Quaker Chemical Corp. (NYSE:KWR) estimates are climbing after the latest earnings release. Shares have sold off, but that created a great value.
Company Description
Quaker Chemical is a chemical company providing services and chemicals for the steel, auto, mining and various other industries. The Philadelphia-based company has over 1,200 employees and a market cap of about $250 million.
Big Surprise
On Apr 27 Quaker Chemical reported quarterly results that showed a 35% increase in volume, which lead to a 30% jump in sales, to $126.3 million.
The jump in volume helped offset a slight decline in price, allowing earnings to climb to 73 cents per share. That number was more than double the 32 cents analysts were expecting.
Stronger Balance Sheet
Quaker Chemical’s bettered its debt-to-capital ratio to 24%, from 31% a year ago, thanks to the rebounding business activity.
Analysts Like It
Following the news, analysts raised full-year estimates for both 2010 and 2011. The Zacks Consensus Estimate for this year is up 71 cents, to $2.51.
Quaker Chemical analysts expected earnings of $2.83 next year, up 82 cents. If the company meets those expectations the annual growth rates will be 49% and 13%, respectively.
Trumping its Peers
Quaker Chemical boasts an impressive 16.7% ROE, more than double the 6.5% the peers are averaging. The company is operating with a net profit margin of 5.3%, relative to its industry average of 2.7%.
The Chart
Shares of KWR sold off sharply in the midst of the recent down trend, but it could produce a great value. The stock is trading at just 9 times forward earnings and with a PEG ratio near 0.7.
Bill Wilton is the Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Growth Trader service
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