CLARCOR Inc. - Growth & Income

CLARCOR Inc (CLC) was recently upgraded to a Zacks #2 rank (buy) after reporting solid third quarter results on September 15. The company beat the Zacks Consensus Estimate by 10%.

CLARCOR makes filter products for the industrial, mobile, and consumer markets. It was founded in 1904 and is headquartered in Franklin, Tennessee. It has a market cap of $1.9 billion.

Second Quarter Results

CLARCOR reported third quarter earnings per share of $0.55, up from $0.42 in the same period of 2009.

Third quarter gross profit was 34.8% - its highest in 10 years. CLARCOR has been improving efficiency as it eliminates costs and restructures its HVAC operations. Operating profit improved 30% over the same period in 2009.

Overall net sales increased 14%. The company saw strongest sales growth in its engine/mobile filtration division, which is also its highest margin business line. Net sales for the division increased 23% year-over-year.

Outlook

Management raised the lower end of its earnings guidance for the remainder of the year. The company now expects 2010 EPS in the range of $1.80 to $1.85. The 2010 Zacks Consensus Estimate was also revised up to $1.83, representing 31% growth year-over-year. Estimates for 2011 are currently $2.06, or 13% higher than 2010.

Fundamentals

CLARCOR trades at 2.6x book value, a premium to the peer group multiple of 1.4. Considering the company's higher than average return on equity, this premium appears justified. CLARCOR recently traded at 18.4x next year's earnings estimates.

CLARCOR yields 1.1%, slightly below the industry average of 1.8%.

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