Corn Products International, Inc. (CPO) continues to click on all levels. This Zacks #1 Rank (strong buy) just reported first quarter earnings which rose 103% over last year. While shares are at multi-year highs, it trades with a forward P/E of just 12.
Corn Products is the largest producer of dextrose in the world and manufactures starches, high fructose corn syrups and glucose.
The company provides a variety of ingredients to customers in 60 industries including food, beverages, pharmaceuticals, animal feed, corrugating, paper and textiles in 50 countries around the world.
Corn Products Easily Beat in Q1
On May 2, Corn Products reported its first quarter results and blew by the Zacks Consensus Estimate by 39%. Earnings per share were $1.28 compared to the consensus of 92 cents. It made just 63 cents a year ago.
It was the 8th consecutive earnings beat. You can see on the earnings surprise chart, that the recent earnings surprises have been larger in magnitude.
Sales Jumped Due to National Starch Acquisition
Sales rose 56% to $1.5 billion from $937 million due to higher volume and $348 million of sales associated with the recently acquired National Starch business. Higher selling prices added $149 million to the result and $22 million was the result of favorable foreign exchange rates.
All the geographic segments saw sales growth in the quarter. North America rose 44% to $780 million from $541 million on stronger volumes, higher pricing and favorable foreign exchange rates.
South American sales rose 32% to $368 million, with the growth mainly coming from a $57 million improvement in price/mix.
Asia Pacific jumped 133% to $182 million due primarily to higher volumes. Europe, Middle East, Africa (EMEA) climbed 219% to $130 million from $41 million due to higher volumes.
Raised 2011 Guidance
Given the strong quarter, Corn Products raised its earnings per share guidance to a range of $4.85 to $5.15 but that also includes the 75 cent per share NAFTA settlement with Mexico and some other charges.
50 cents of the guidance increase is due to operations, however.
Zacks Consensus Estimates Surge Higher
Analysts scrambled to raise 2011 and 2012 estimates after the solid quarter and higher guidance. Even with the high price of corn, it appears that Corn Products has pricing power to offset those costs.
The 2011 Zacks Consensus Estimate jumped to $4.49 from $4.12 per share in just the last week with 5 estimates moving higher in that time.
That is earnings growth of 38%.
The 2012 Zacks Consensus Estimate also jumped to $4.91 from $4.43 per share in the last 7 days, which is earnings growth of 9%.
Shares at Multi-Year High But Still Cheap
Shares of Corn Products have been hot since the recession lows in 2009. Recently they traded at 5-year highs.
But given the earnings growth, shares aren’t expensive.
In addition to a P/E of only 12, it has a price-to-book of 1.9 which is under the 3.0 level used to designate “value.”
The company also has a stellar price-to-sales (P/S) ratio of 0.8. A P/S ratio under 1.0 usually indicates value.
It also has a solid return on equity (ROE) of 13.2%.
Additionally, Corn Products rewards shareholders with a dividend, currently yielding 1.0%.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor in charge of the market-beating Zacks Value Trader service. You can follow her at twitter.com/traceyryniec.
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