Is This Small Cap Glassware Company Fit For Serving Returns? (LBY)
Libbey (NYSE: LBY) manufactures glassware, metalware and ceramics for dining. These include cups, plates and serving dishes. With roots stretching back to 1888, Libbey claims to be the largest Western hemisphere player in the industry.
Selling its products to individuals, food services and distributors, Libbey has an extended reach in the industry.
Libbey noted that 2013 would be a difficult year. So far this has proven true, with the company missing Q1 and Q2 earning estimates. However, the company is optimistic for the period spanning 2014 through 2016.
Libbey very clearly laid out its goals in its annual report. These include expanding its food service business in the US and Mexico, raising European margins and accelerating growth in China.
Libbey looks to achieve this by expanding its distribution network and increasing efficiency in the manufacturing process.
Customers and Competitors
For the year ended 2012, 74 percent of Libbey’s sales were in North America. The company reported working with approximately 500 food service distributors and no customer made up more than ten percent of sales. With products distributed to more than 100 countries, Libbey’s operations are unlikely to be affected by geopolitical pressures or the loss of a large customer.
None of the company’s major competitors are publicly traded. This gives Libbey the advantage of being able to raise capital on an unmatched level, but succepts the company to Wall Street pressures and fees.
After falling during the 2009 calendar year, sales have been on the rise, surpassing 2008 revenue in 2011. Neglecting special items and tax (operating income after depreciation), earnings have shown a similar pattern, up 139.4 percent since 2008 to 91 million.
Taking special factors and taxes into account, 2012 income was just $7 million dollars. This is a key example of the danger of observing just the bottom line.
Libbey is expected to announce its third quarter earnings on October 24. Historically, this is the company’s biggest quarter and will be interesting after it missed Q2 earnings by 16 percent at $0.57/share.
Compared to the household durable good industry, Libbey’s P/E ratio is in the 63rd percentile at 16.63. However, price/sales comes in below the average at just 0.6. The price/book ratio is also worth noting, at $13.10 while the share price is just $24.00.
Insiders and Institutions
Along with a series of non-open market dispositions and acquisitions, two insiders have taken place in open transactions over the past two weeks in a similar price range. This includes one director cutting his position and another opening his.
Institutions own 74.3 percent of the float, and have added to their position this quarter. Institutions have added four percent, with mutual funds growing their stake by 28.86 percent.
Shares are up 24.03 percent this year, closing at $24.00 on Tuesday.
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