Raven Industries Inc. (RAVN) retains a Zacks Outperform rating. The company is a manufacturer of a variety of products for customers in the industrial, construction and military/aerospace markets. Raven recently announced its fiscal 2012 first quarter results, delivering an EPS of 86 cents versus 72 cents in year-earlier quarter; quite easily outperforming the Zacks Estimate of 74 cents.
Total revenue increased 19% year over year to $101.5 million, striding ahead of the Zacks Estimate of $96.0 million. The improvement was largely driven by the Applied technology and Aerostar segment which reported a double-digit growth in sales.
During the first quarter of fiscal 2012, Raven’s sales across all the segments witnessed a double-digit growth. The improvement in sales was driven by a surge in sales in the international markets, particularly in South America and the erstwhile Soviet Republics, and energy markets, and higher sales of parachutes and protective wear, bed controls and avionics.
During the quarter, the board of directors approved a 12.5% increase in regular quarterly dividend to 18 cents per share. This is the twenty-fifth consecutive increase in annual cash dividend. The company last increased its dividend on May 20, 2010, from 14 cents to 16 cents per share. Even during the last quarter Raven paid a special dividend of $1.25 per share in addition to the regular quarterly dividend of 16 cents per share. The company returned approximately $34 million in cash to shareholders through these two dividends.
Raven continues to believe that farm income will drive its performance in fiscal 2012, with farmers turning more and more to the company’s cost-effective products. The company also plans to bring two new blown-film extruders in line during fiscal 2012. The company is committed to achieving a 12% -15% improvement in net income and double its investments in plant and equipment to $30 million.
Recently, Raven partnered with NovAtel Inc. to integrate NovAtel’s industry leading Global Navigation Satellite System (GNSS) positioning technology with its comprehensive line of precision agriculture products. This partnership will not only drive new growth opportunities for both companies but also benefit customers by increasing efficiency in their agricultural operations.
Raven’s business strategy is to boost the company’s earnings and achieve sustainable growth in the long term. With this end in view, the company is now targeting precision agriculture, engineered films and situational surveillance markets where there is ample scope of gaining market share with new products and higher production capacity.
Raven with its ground -breaking ideas has helped define the concept of precision agriculture and continues to spearhead efforts to improve the position of farmers around the world. We currently have a Zacks #2 Rank (short-term ‘Buy’ recommendation) on the stock.
South Dakota-based Raven Industries Inc. is an industrial manufacturer providing a variety of products for the agricultural, industrial, construction and military/aerospace markets. The company operates through four business segments: Engineered Films, Electronic Systems, Applied Technology and Aerostar. Graco Inc (GGG) and Spartech Corp. (SEH) are the two close competitors of Raven.
