RC2 Corp. - Aggressive Growth

RC2 Corp (RCRC) analysts keep raising their estimate outlook and the company continues to top those expectations.

Company Description

RC2 Corp makes products for mothers and young children that include toys, monitors, feeding systems and developmental items under 3 brand names: The First Years, Lamaze, and JJ Cole Collections. Licensed brands include Bob the Builder, Winnie the Pooh and Toy Story.

Estimate Keep Climbing

Current year estimates are not knocking anyone’s socks off, but are steadily increasing. The Zacks Consensus Estimate for 2010 is up 6 cents, to $1.49 in the past 3 months. If met, this would be a modest 2% year-over-year growth rate.

However, next year’s outlook is rising sharply. Projections are up 27 cents on average, to $1.91, which is a 28% growth rate. As the company continues to sign more and more licensing deals, the estimates keep inching higher.

Good Earnings History

RC2 Corp has topped Wall Street’s expectations in each of the previous 5 quarters and in 6 of the past 7. In the most recent quarter, reported Jul 20, the company earned 17 cents per share, down 2 cents over the past year, but 2 cents better than expected.

Industry Leader

When you look at the financials, it is not hard to see why RC2 Corp is the top ranked company in the 11-company industry. RC2 Corp operates with a 6.9% net profit margin, while its peers average a 2.9% loss. The company boasts a 12.3% return on equity, while the norm for the industry is to break even.

The valuations picture is looking good as well. Share of RCRC are trading at 11 times next year’s earnings. The PEG ratio isn’t astounding, but at 1.2 we are not going to be overpaying for the earnings growth.

The Chart

You can see recent recession perfectly reflected in the share price and full-year estimates for RCRC. Fortunately, the estimates have not bounced back as quickly as other companies and this could be a chance to get in toward the beginning of a long-term trend.

RC2 Corp - ticker RCRC > <P ALIGN=