Pall Corporation - Growth & Income

Management also raised its guidance following the strong quarter, prompting analysts to revise their estimates higher. This sent the stock to a Zacks #1 Rank (Strong Buy).

First Quarter Results

Pall recently reported its results for the first quarter of 2011. Earnings per share came in at 61 cents, a 53% increase over the same quarter last year. It was also 22% higher than the Zacks Consensus Estimate, marking the company's third consecutive positive earnings surprise.

Sales increased a solid 10.7% year-over-year. The Industrial segment grew 14.1%, driven by a 29.4% jump in Microelectronics and a 24.4% increase in Aeropower. The Life Sciences segment was also strong with top-line growth of 10.4%.

The gross margin expanded from 49.4% of sales to 51.0%. Meanwhile, selling, general and administrative expenses declined from 32.3% to 30.1%. These factors, along with solid revenue growth, led to a stellar 39.2% increase in earnings before interest and taxes.

Growth & Income

Following the strong quarter, management raised earnings guidance for 2011 to a range of $2.48 - $2.63, up from previous guidance of $2.35 - $2.55. This caused analysts to revise their estimates significantly higher, sending the stock to a Zacks #1 Rank (Strong Buy). Estimates for 2011 have been soaring over the last few months, as seen in the company's Price & Consensus chart:

The Zacks Consensus Estimate for 2011 is $2.63, at the upper end of guidance. This represents 24% growth over 2010 EPS. The 2012 estimate is currently $2.98, corresponding to 14% EPS growth.

The stock currently yields 1.3%. Pall Corp has raised its dividend at an average annual rate of 9% since 2003.

Valuation

Shares are up more than 50% since late August, but valuation remains reasonable because of the rising earnings estimates. The stock trades at 19.2x forward earnings, a discount to the industry average of 21.4x.

Read the October 11 article here.

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Todd Bunton is the Growth & Income Stock Strategist for Zacks.com.

 
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