EnPro Industries Inc. (NPO) saw sales increase by 23% in the first quarter as demand improved in all of its markets. The company has a solid 5-year average return on equity (ROE) of 14%.
EnPro manufactures industrial sealing products, metal polymer and filament wound bearings, reciprocating compressor components and diesel, seals for heavy-duty trucking and natural gas-fired engines.
The company has worldwide operations with 43 manufacturing facilities in the Americas, Europe and Asia. Customers are located in over 100 countries.
EnPro Beats For the 4th Quarter in Row
On May 6, EnPro did it again as it surprised on first quarter estimates by 43%. Earnings per share were 73 cents compared to the consensus of 51 cents. The company made just 20 cents a share in the same quarter of 2009.
Sales jumped by 23% to $228.2 million from $185.1 million in the first quarter of 2009 as the company saw improvement across all of its segments. Sales grew 17% in the Sealing Products segment and they increased 32% in the Engineered Products segments.
The company’s cost cutting during the recession also added to the bottom line as its segment profit margins increased to 15% from 7.1% in the year ago quarter.
“While all of our businesses reported higher levels of activity, we are particularly encouraged to see improvements in the heavy-duty truck markets served by Stemco and the automotive and industrial markets served by GGB,” Steve Macadam, president and CEO said.
“Because conditions in these markets have been weak for some time, their improvement confirms our expectations for a healthier business environment in 2010,” he added.
Zacks Consensus Estimates Jump After the Results
The company didn’t provide actual EPS or revenue guidance for the second quarter or the year. But EnPro did issue an upbeat assessment of the rest of the year stating that its markets are showing signs that the recovery will extend into the second half of 2010.
Given the big beat in the first quarter and the bullish outlook, analysts have been raising estimates.
3 estimates have moved higher for the second quarter as the Zacks Consensus has climbed 10 cents in the last week to 74 cents per share.
Similarly, 3 estimates have also been revised upwards on the full year as the 2010 Zacks Consensus Estimate has risen 24 cents to $2.67 per share in the last 7 days.
Analysts now expect 2010 earnings growth of 54%.
Value Fundamentals
EnPro is trading near its 52-week high but is still well-off its multi-year high set before the global recession. You can see the 5 year chart below.
Yet despite the stock surge, the company is still trading with a forward P/E of just 12.1 which is well under the industry average of 23 and under 15, which is traditionally the cut-off for a value stock.
Its other value characteristics are a price-to-book ratio of just 1.6 and a price-to-sales ratio of only 0.7.
EnPro is a Zacks #1 Rank (strong buy) stock.
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.
