Briggs & Stratton Corp. (BGG)
Company Description
Briggs & Stratton makes air cooled gasoline engines for outdoor power equipment. The company designs, manufactures, markets and services these products for original equipment manufacturers worldwide. Briggs & Stratton engines are used in lawn mowers, generators, power washers and other outdoor equipment.
Big Surprise
On Apr 22 Briggs & Stratton announced results for the third quarter of fiscal 2010. Net sales increased 3.1% to almost $700 million.
Net income rose 68%, sending earnings per share to 85 cents. This was well ahead of the Zacks Consensus Estimate, which was only 51 cents. The report marked Briggs & Stratton’s third surprise in the past 4 quarters. Last quarter the company met expectations.
Clearer Outlook
Briggs & Stratton raised the low end of its full-year expectations after a litigation settlement was reached. The class action lawsuit was previously disclosed.
Now that the cost is known, the analysts have also raised their forecasts. The full-year Zacks Consensus Estimate rose from 88 cents to 98 cents.
Next year’s forecasts are averaging $1.33, up 9 cents since the release. After the revisions the annual growth rates are 27% for this year and 36% next year.
Is the Consumer Back?
If you are of the camp that expects consumers to continue to ramp up spending, this is a solid play. While many other retailers have already reported huge jumps in sales, the higher ticket items have lagged.
In a recession customers don’t replace items like lawnmowers, but now there is a back log of demand for items that have engines, like Briggs & Strattons.
The Chart
Investors took a liking to Briggs & Stratton’s results, but shares hit a lull on the European debt worry. Buyers have returned recently, so we could see momentum return on the good news.
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