One thing is clear from this earnings season. Those companies with a global reach, especially in chemicals and industrial materials, have fully rebounded from pre-recession levels. PolyOne Corporation (POL) just reported a record 2010 as earnings rose 252% and sales jumped 27%.
PolyOne manufactures specialized polymer materials which are found in just about every industry from transportation, to colors used in packaging, to electronics and healthcare.
It provides services in natural rubber latex compounds, color additives, as well as screen printing inks and dyes, to name a few.
Destination: Brazil
This Zacks #1 Rank (strong buy) has been expanding in key international markets.
With $378 million in cash at the end of 2010, it has been using its cash to further drive growth in the emerging markets.
In October 2010, it acquired Polimaster, a Brazilian color business and in January 2011 it bought Uniplen, a Brazilian specialty engineered materials and thermoplastics distribution business with revenue of $34 million.
Surprised in the Fourth Quarter By 21%
On Feb 3, PolyOne reported its fourth quarter results and surprised on the Zacks Consensus Estimate for the 6th straight quarter.
Earnings per share were 17 cents compared to the consensus of 14 cents. It is a 55% gain over the 11 cents earned in the fourth quarter of 2009.
For the full year, earnings jumped to 88 cents from 25 cents in 2009.
Revenue rose 12% to $617.8 million in the fourth quarter driven by higher volume and selling prices. Full year revenue climbed to $2.6 billion from $2.1 billion last year.
Double Digit Earnings Growth Expected in 2011
After a record 2010, the company is bullish on 2011. Over the last 4 years, it has instituted a strategy to become a specialty company and expand its geographical footprint.
It expects double digit earnings expansion in 2011.
Analysts also expect those results, projecting earnings growth of 14.6% in 2011 or $1.01 per share.
Earnings are also expected to grow by 20% in 2012 to $1.21 per share. That is up from $1.19 per share from just 7 days ago.
There is Value in POL
PolyCore is not the cheapest stock around. But it has a forward P/E of 14.2 which puts it in the range of a value stock, which I consider to be under 15. It is also trading for less than its peer, Westlake Chemical (WLK) which has a forward P/E of 16.5.
Its price-to-book ratio is 2.6, which is also within the value parameters although it’s on the pricier side.
The company has a fabulous 1-year return on equity (ROE) of 38.9%.
Shares Soaring
Investors have liked the turnaround strategy. Shares have soared off the March 2009 lows and are now at multi-year highs. See the 5-year chart below.
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.
POLYONE CORP (POL): Free Stock Analysis Report
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