Sigma-Aldrich Corp. (SIAL) recently opened its European regional headquarters “Einstein Facility” in Switzerland. It will hold approximately 50 employees and will bring together the whole European management in one location.
In February, Sigma-Aldrich announced its fourth-quarter earnings of 83 cents, which surpassed both the Zacks Consensus Estimate of 80 cents and prior-year earnings per share (EPS) of 80 cents.
Reported sales in the fourth quarter of 2010 were $582 million, increasing 2% year over year. Excluding a 1% impact from unfavorable currency rates, fourth-quarter organic sales growth came in at 3%.
The Zacks Consensus Estimate for revenue was $588 million.
In the fourth quarter of 2010, each of SIAL’s research business units drove organic sales growth that either exceeded or was equivalent to the growth achieved in the first half of fiscal 2010. This was due to the company’s strong presence in non-European international markets.
In fiscal year 2010, net cash provided by operating activities was $523 million and free cash flow was $424 million versus $516 million and $396 million, respectively, in fiscal 2009. Capital expenditure was $99 million compared with $120 million in the prior year.
The company repaid $40 million of its debt and returned $177 million to shareholders through share repurchases and an increase of 10% in the quarterly dividend rate. The company’s debt-to-capital ratio climbed 21% at the end of the fourth quarter of 2010 from 25% at the end of the prior year.
For full-year 2011, the company expects sales to increase in a mid-single digit range, with market conditions similar to 2010. Sales growth is not likely to be significantly impacted if currency exchange rates remain near current levels.
Diluted adjusted EPS forecast (excluding restructuring or other extraordinary special charges) is expected to be $3.45 to $3.60, a 4% to 9% increase over 2010’s adjusted EPS. Net cash provided by operating activities is expected to exceed $500 million. Free cash flow is expected to accelerate $375 million.
The effective tax rate is anticipated to be approximately 30%, including a benefit from the U.S. R&D tax credit comparable to that realized in 2010. Net cash provided by operating activities is anticipated to exceed $500 million. Capital expenditures are expected to be approximately $125 million.
Sigma-Aldrich faces stiff competition from Bayer AG (BAYRY.PK) and privately held companies Brenntag AG and VWR International, LLC.
We currently maintain a Zacks #3 Rank (short-term Hold recommendation) on Sigma and a long-term Neutral recommendation.
SIGMA ALDRICH (SIAL): Free Stock Analysis Report
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