Worthington Industries (WOR) has surprised on the Zacks Consensus Estimate 3 out of the last 4 quarters by an average of 91% as the global recession has eased.
Worthington Industries operates in the steel processing, metal framing and pressure cylinders markets. It has 3 main business segments and 9 joint ventures that operate in a hub and spoke model. All segments are related to steel processing.
The company is one of the leading manufacturers of pressure cylinders including propane tanks for gas grills, scuba tanks, and hand torches. Its metal framing and ceiling grid systems are used in commercial and residential construction.
Worthington operates 64 facilities in 11 countries.
Zacks Consensus Estimates Rise
Worthington is scheduled to report fiscal 2011 first quarter results on Sep 30. It will be closely watched due to recent earnings warnings in the steel sector as demand slows and raw material prices rise.
Fiscal 2011 Zacks Consensus Estimates are up a penny to $1.22 in the last 60 days. This is earnings growth of 26% from fiscal 2010.
The company saw its first company loss in fiscal 2009 of $1.37 per share as the global recession ravaged manufacturing and industrial companies.
On June 30, when the compay reported fiscal fourth quarter results, it was optimistic about the coming year.
“We believe the economic environment in which we operate will continue to improve, though not linearly, over the next 24 months,” said John P. McConnell, Chairman and CEO.
Worthington Never Stopped Paying Its Dividend
Despite a rough fiscal 2009, Worthington never stopped paying its quarterly dividend. It has paid a dividend since it became a public company in 1968.
Recently, it announced its 171st consecutive quarterly dividend which is currently yielding 2.6%. This is higher than the industry average, which is zero.
5-Year Chart
Shares have rebounded off their March 2009 low but are still well below the 2007 highs, when the steel and industrial sectors were at their peak before all heck broke loose with the financial crisis.
Value Fundamentals
Worthington is trading well under its industry average at 12.4x forward estimates compared to the industry’s 17.2x.
Its price-to-book ratio is within the value parameters at 1.6.
Over the last 5-years, its average return on equity (ROE) is a solid 12.3% but it has struggled in recent years. The 1-year return on equity is just 9.5% but this surpasses the industry average of only 7.2%.
Worthington 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. You can follow her at twitter.com/traceyryniec.
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