RC2 Corp’s (RCRC) second quarter 2010 earnings surpassed the Zacks Consensus Estimate, driven by strong international sales. The company also raised the lower end of its earnings guidance for fiscal 2010.
We expect the company to benefit from its aggressive acquisition strategy, and remain optimistic regarding its recent acquisition of privately-held JJ Cole Collections, a marketer of premium infant products. Additionally, the company’s cost reduction initiatives will likely drive the margins. Given the demographic trends, RC2’s focus on core early childhood also bodes well.
Considering the company’s product line-up in the second half of 2010, we expect an improvement in the top line. Moreover, strong cash flow and modestly levered balance sheet offer a solid operating backdrop. Thus, we are upgrading the stock from Neutral to Outperform.
RC2 CORP (RCRC): Free Stock Analysis Report
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