Tickers in this Article: CASC, TM, SI, GM, UPS
Cascade Corp (NYSE:CASC) provides lifting materials for industrial lift trucks. Its underlying customer base operates on a global scale and includes many leading operators in the industrial space. As such, its business is a solid barometer on industrial activity across the world. Based on its recent results, many international economies remain on the upswing. Cascade's own prospects going forward are much less certain.

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Full-Year Recap
Cascade's sales jumped 31% to $535.8 million. Organic growth was very strong at 27%, as positive currency fluctuations accounted for the other four percentage points. The Americas region made up 18 percentage points of the top line increase, with the remaining regions of Europe, Asia Pacific and China representing between 2 and 4% of the growth.

Gross profit shot ahead 38% to $169.3 million, due to very moderate cost of goods sold growth. Management also held operating selling and administrative costs in check, as they rose only 11.5% to grow well below the sales expansion. Proceeds from Australian floods brought in $3.1 million, following an outflow of $3 million last year. This culminated into a more than doubling of operating income to $87.4 million.

Modest income tax expense meant that net income nearly tripled to $63 million, or $5.58 per diluted share. However, operating cash flow of $54.2 million fell below reported net income, and subtracting out $13.4 million in capital expenditures resulted in free cash flow of $40.8 million, or approximately $3.61 per diluted share. (To know more about income statements, read Understanding The Income Statement.)

Outlook and Valuation
For the coming year, analysts project average sales growth of 5.2% and total sales of $564 million. They expect earnings of $5.37 per share, which would represent a slight annual decline. At the current share price just about $49 per share, this represents a forward P/E multiple of about nine. The trailing free cash flow multiple is much higher at 15.3 times.

The Bottom Line
The market is still ahead of Cascade over the past five years as the credit crisis severely hurt Cascade's business during the downturn. Its operations have come roaring back over the past couple of years as underlying customers such as Toyota Motor (NYSE:TM), United Parcel Service (NYSE:UPS), Siemens (NYSE:SI) and General Electric (NYSE:GE) have seen sharp improvements in their own business demand. However, Cascade's stock is still off sharply from its highs prior to the crisis.

At this point, the stock looks to be trading right around fair value. The earnings multiple is quite reasonable, and though free cash flow production for the year was unimpressive, past years have seen much stronger capital generation. However, Cascade had been relying on Asia for its growth prospects and the region has a much more uncertain economic growth outlook, at least in the nearer term. (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 article.

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