A.T. Cross (Nasdaq:ATX) was perhaps known best for its Cross pens and related writing accessories, but in recent years has shifted its focus to a couple of higher end sunglass brands. Eyewear is increasingly driving the company's fortunes, and their solid growth potential make the stock worth a look. For more, see Earning Forecasts: A Primer.

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Full Year Recap
Sales advanced 10.3% to $175 million. This consisted of a moderate 4.5% growth in the accessory division (58.5% of total sales) and rapid 19.8% growth in the optical unit (41.5% of total sales). Accessories consist of Cross brand ball-point, fountain and rolling ball pens as well as mechanical pencils. The optical business sells two premium sunglass brands. The Costa brand focuses on "those who live to be on the water" while the Native trade mark caters to individuals that are active athletes. Luxottica (NYSE:LUX) is a key competitor in the eyeglass space, as are sporting brand providers including Oakley, Under Armour (NYSE:UA), Nike (NYSE:NKE) and other related brands sold at sporting goods retailers such as Dick's Sporting Goods (NYSE:DKS).

Operating income jumped 32.8% to $12 million and was driven primarily by optical, which saw operating profits advance 31.4% to $10.8 million, or 90% of total Cross profits. The accessories segment only accounted for 10% of profits but jumped 47.5%, though economic struggles in Europe sent its fourth quarter sales and profits down. Net income advanced a slightly stronger 33.9% to $8.3 million, or 64 cents per diluted share. The company did not provide cash flow details in its earnings press release.

Outlook
Cross projects earnings between 70 cents and 75 cents per diluted share for the coming year. This would represent an annual growth of 9.4% to 17.2%. The lone analyst covering the stock projects sales growth of 7.3% and total sales just north of $187 million for all of 2012.

Over the long haul, management expects to "consistently grow our top and bottom line at a double digit rate." Sales for 2011 finally exceeded the $160.2 million reported in 2008 at the height of the credit crisis. The accessories division is much more cyclically sensitive than optical, as indicated by the 18.4% drop in sales it experienced between 2009 and 2008 and the drop in the fourth quarter.

The Bottom Line
Optical is on a much more impressive growth trajectory and increasingly driving total company fortunes. The brands are still small, but management believes they have plenty of expansion potential, both in North America as well as internationally. At a forward P/E of 11.2, the stock is valued reasonably to gain exposure to the rapidly growing Costa and Native eyewear brands. Overall, the brands operate in the higher end of the marketplace and at subsequently higher price points. As such, they throw off solid cash flow and are relatively inexpensive to produce and maintain. Investing in the stock brings less appealing writing instrument exposure, but is an appealing way to focus on a couple of eyewear brands with solid growth potential. For additional reading, check out 5 Must-Have Metrics For Value Investors.

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At the time of writing, Ryan C. Fuhrmann did not own shares in any of the companies mentioned in this articles.

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