Is This Small Cap Glassware Company Fit For Serving Returns?

Libbey LBY manufactures glassware, metalware, and ceramics for dining. These include cups, plates, and serving dishes. With roots stretching back to 1888, Libbey claims to be the largest western hemisphere payer in the industry.

Selling their products to individuals, foodservices, and distributors, Libbey has an extended reach in the industry.

Growth Strategy

Libbey notes that 2013 will be a difficult year. So far, this has proven true with the company missing Q1 and Q2 earning estimates. However, the company is optimistic for 2014 through 2016.

Libbey very clearly lays out its goals in their annual report. These include expanding their foodservice business in the US and Mexico, raising European margins, and accelerating growth in China.

Libbey looks to achieve these by expanding its distribution network and increasing efficiency in the manufacturing process.

Customers and Competitors

For the year ended 2012, 74 percent of Libbey’s sales were in North America. The company reported working with approximately 500 foodservice distributors and no customer made up more than ten percent of sales. With products distributed to more than 100 countries, Libbey’s operations are unlikely to be affected by geopolitical pressures or the loss of a large customer.

None of the company’s major competitors are publicly traded. This gives Libbey the advantage of being able to raise capital on an unmatched level, but succepts the company to Wall Street pressures and fees.

Related: Up 500 Percent This Year, Investors Are Still Overlooking This Small Cap Stock

Financials

After falling during the 2009 calendar year, sales have been on the rise, surpassing 2008 revenue in 2011. Neglecting special items and tax, (operating income after depreciation) earnings have shown a similar pattern, up 139.4 percent since 2008 to 91 million.

Taking special factors and taxes into account, 2012 income was just seven million dollars. This is a key example of the danger of observing just the bottom line.

Libbey is expected to announce its third quarter earnings on October 24th. Historically, this is the company’s biggest quarter and will be interesting after it missed Q2 earnings by 16 percent at $0.57/share.

Valuation

Compared to the household durable good industry, Libbey’s P/E ratio is in the 63rd percentile at 16.63. However, price/sales comes in below the average at just 0.6. The price/book ratio is also worth noting, at $13.10 while the share price is just $24.00.

Insiders and Institutions

Along with a series of non open market dispositions and acquisitions, two insiders have taken place in open transactions over the past two weeks, in a similar price range. This includes one director cutting his position and another opening his.

Institutions own 74.3 percent of the float, and have added to their position this quarter. Institutions have added four percent, with mutual funds growing their stake by 28.86 percent.

Shares are up 24.03 percent this year, closing at $24.00 on Tuesday.