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Tickers in this Article: CASC, UPS, GE, SI, TM
Cascade Corp. (Nasdaq:CASC) is a niche player in the industrial sector, providing lifting materials for industrial lift trucks. Its customers operate all over the world and make Cascade somewhat of a bellwether for global economic activity. Judging by its first quarter results, this activity is coming in strong than expected. Although Cascade still has yet to recover to 2008 levels, it is on the right path for a full operational rebound. (For more on selecting stocks, read 4 Steps To Picking A Stock.)

TUTORIAL: Earnings Quality

First Quarter Recap
Net sales jumped 40% on a constant currency basis to $136.2 million thanks to broad-based growth across Cascade's geographic markets. Sales in the Americas jumped 58% to account for 53% of total sales. This was generally attributed to improving economic conditions. European sales increased 23% to make up just over 20% of sales as turnaround efforts in the region paid off. Asia Pacific sales advanced 31% to account for just over 13% of total sales on overall market growth and the global economic recovery. Strong continued growth in the Chinese economy lifted sales 47% in the country - Chinese sales grew to nearly 14% of total sales.

Segment operating profits jumped considerably and were led by the Americas, up 146% to $13 million. Asia Pacific was up 173% to $4 million, and revenue hit $1.3 million in Europe following a loss in last year's first quarter. Chinese profits grew a more modest 19% to $6.3 million. Total company operating income jumped 178% to $24.5 million. Net income improved 186% to $16.4 million, $1.46 per diluted share, to beat analyst projections of 86 cents by a very wide margin. (To learn more, check out How To Evaluate The Quality Of EPS.)

Cascade didn't provide a business outlook, but analysts currently project full year sales growth of just over 15% and total sales of nearly $472 million. The current earnings projection is $3.60 per share, though projections are likely to increase a bit after the very strong first quarter.

Bottom Line
Shares of Cascade jumped more than 20% after earning much more than analysts projected, but still trades at a reasonable forward P/E of 11.2. The underlying operations should continue to do well as the economy improves, though sales and earnings are still well below 2008 levels of $558 million and $4.88 per share, respectively.

Cascade's current operating levels leave further room for recovery to previous highs. More generally, its results are serving as a solid indicator that underlying global activity continues to recover from the depths of the financial crisis. Cascade's clients operate in industrial manufacturing, materials handling and any industry that employs lift trucks. This includes a diverse customer base such as Toyota Motor (NYSE:TM), United Parcel Service (NYSE:UPS), Siemens (NYSE:SI) and General Electric (NYSE:GE). (For more on how these result will effect the stock price, read Earnings Power Drives Stocks.)

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