Cooper Industries plc (CBE) has updated its third-quarter and full-year 2011 guidance and for the first time provided an outlook for 2012. Fully diluted earnings per share for the third quarter of 2011 is expected to be in the range of $0.94-$0.98 by the company. The company expects sales in the quarter to rise by 9% to 12% compared with the third quarter of 2010. The third-quarter 2011 sales include revenue contribution from the Martek and Gitiesse acquisitions (approximately $25 million).
The contribution from recent acquisitions will however be neutralized by softness in residential and commercial-facing businesses, rise in restructuring spending by about $4 million, material cost inflation, which is affecting the EPG Segment margin as well as decline in production rate due to restructuring activity. Benefits from the industrial businesses, including the oil and gas vertical market, and continued strength in the emerging markets are expected to somewhat offset these negative effects on sales.
For 2011, Cooper expects to achieve a record level of fully diluted earnings per share from continuing operations as it updated its outlook to $3.75-$3.82. This represents a year-over-year increase of 17% at the mid-point of the guidance. Investments in innovation of new product, globalization and acquisitions are included in the growth strategy of the company.
As of September 15, 2011, the company repurchased more than 6.5 million shares in the third quarter. Till date, the company repurchased approximately 7 million shares during 2011, resulting in shares outstanding of less than 160 million.
For 2012, the company provided sales growth expectation of mid-single digit and double-digit earnings per share growth target. Cooper is confident of attaining strong and sustained growth as it remains focused in its strategy of making investments in growth opportunities.
Incorporated in Ireland and headquartered in Houston, Texas, Cooper Industries plc is a diversified manufacturer, marketer, and distributor of electrical products, tools, and hardware. General industrial manufacturers, such as those in the aerospace and automobile industries, are the main users of Cooper’s power tools and assembly systems. Its brands include Buss, Edison, Crouse Hinds, Weller, DGD, Buckeye, Cooper, and Master Power. Major competitors of the company are ABB Ltd. (ABB), General Electric Co. (GE) and Stanley Black & Decker Inc. (SWK).
We continue to maintain a Neutral rating on Cooper Industries, with a Zacks #3 Rank (Hold recommendation) over the next one-to-three months.
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