PolyOne Corp - Aggressive Growth

PolyOne Corp (POL) reported yet another earnings surprise and continues to focus on acquisitions to strengthen its global presence.

Thanks to continuously rising estimates, forecasts are projecting the highest EPS figures in 5 years for this Zacks #1 Rank (Strong Buy).

Company Description

PolyOne is a specialty polymer materials and service company. It operates around the world but is headquartered in Ohio.

5th Consecutive Surprise

On Nov 4 PolyOne reported third-quarter results that included net income of $49.6 million. Earnings per share came in at 28 cents, a nickel ahead of the Zacks Consensus Estimate. This was the fifth earnings surprise in a row.

Revenues are trending higher recently, but are still not up to pre-recession levels. The most recent quarter showed a 24% increase in the top line, to $548. The solid year over year growth was driven by both higher prices and a 15% rise in volume.

Comments from the CEO highlighted the record operating income for 2 segments and record margins in the third. Additionally, PolyOne brought on over 100 full-time employees as the company sees "a lot of room to grow".

PolyOne is also focused on expanding its presence through bolt-on acquisitions. The most resent purchase was a Brazilian thermoplastics company.

Rising Estimates

Forecasts have been increasingly bullish since the earnings surprise. Estimates are coming in as recently as last week, pushing the 2011 consensus to $1.00, up 3 cents. This year the company is expected to earn $0.86.

Given the $0.37 PolyOne brought in last year, the growth rates are expected to be 133% for 2010 and another 16% in 2011.

The Chart

PolyOne has made a nice V-shaped recovery, emerging from the recession as strong as ever. Thanks to the recent earnings trend, the forecasts are calling for the highest EPS levels in over 5 years. You can see the steadily increasing earnings consensus estimates in the chart below.

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Small Cap Trader service
 
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