Barnes Group Inc. (B) has been growing earnings by the double digits since 2010. Not too shabby for a 154-year old company. This Zacks #1 Rank (strong buy) also has attractive valuations, with a forward P/E of 14.
Founded in 1857 as a spring manufacturer, Barnes now manufactures a diverse group of products in two business segments: Precision Components and Logistics and Manufacturing Services.
It makes custom springs for the automotive and other industries as well as components for jet engines and airframes. The company has global customers and operates from 50 locations on 4 continents.
A Dividend Superstar
Barnes is one of those rare, older companies that is a dividend superstar. It, or its predecessor companies, have paid a dividend since 1934.
On Oct 20, the company announced it was raising its dividend by 25% to 10 cents per share. On an annualized basis, that raised the payout to 40 cents from 32 cents per share.
The dividend is currently yielding 1.6%.
Additionally, Barnes has instituted a new share repurchase program of up to 5 million shares. It recently completed the 2008 share repurchase program so the company has a history of buying back shares.
Barnes Beat By 7.9% in the Third Quarter
On Oct 20, Barnes reported its third quarter results and surprised on the Zacks Consensus by 3 cents. Earnings per share were 41 cents compared to the consensus of 38 cents. This was 52% higher than a year ago when it made just 27 cents.
Sales jumped 12.2% to $325.4 million from $289.9 million in the year ago quarter. Both of its segments saw revenue growth.
Precision Components saw revenue rise 15% to $176.6 million. Organic sales grew $17.9 million due to increases in North American and European industrial manufacturing businesses and from a better performance in the transportation industry, especially automotive.
Logistics and Manufacturing Services increased revenue by 9% to $151.6 million. Organic sales rose $10.5 million due to a strong aerospace aftermarket and North American distribution businesses.
Expecting Double Digit Earnings Growth for 2011 and 2012
Barnes is scheduled to report its fourth quarter and full year results on Feb 17. In October, the company expected revenue to grow 13% over 2010.
Earnings per share are expected to be in the range of $1.43 to $1.48 which is earnings growth of 51% to 56%.
The analysts are in line with this outlook for 2011 and are also bullish on 2012.
The 2011 Zacks Consensus is up 3 cents to $1.47 in the last 90 days.
This is earnings growth of 54%.
For 2012, 1 estimate has moved higher in the last week, pushing the Zacks Consensus Estimate up to $1.75 per share.
That is further double digit earnings growth of 19.3%.
Barnes is a Value Stock
Like most other stocks, Barnes sold off hard during last summer’s market sell-off but has recovered most of it. Shares are once again trading near 52-week highs.
But there’s still value in the shares.
In addition to a P/E under 15, which is what I use to measure a “value” stock, Barnes has a price-to-book ratio of 1.8. A P/B ratio under 3.0 usually indicates value.
For value investors looking for double digit earnings growth in the manufacturing sector, Barnes should be on the short list.
Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.
