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Category: Stock Market and Brady
Date: 7 September 2019 Stock Price: $51.05 We take a look at the 4th quarter earnings for their 2019 fiscal year of Brady Corporation, the company that provides solutions to identify and protect people.
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About Brady Corporation
Brady Corporation is an international manufacturer and marketer of complete solutions that identify and protect people, products and places. Brady’s products help customers increase safety, security, productivity and performance and include high-performance labels, signs, safety devices, printing systems and software. Founded in 1914, the Company has a diverse customer base in electronics, telecommunications, manufacturing, electrical, construction, medical, aerospace and a variety of other industries.
Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2018, employed approximately 6,200 people in its worldwide businesses. Brady’s fiscal 2018 sales were approximately $1.17 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available at www.bradycorp.com.
The image below shows the geographical presence of Brady Corporation
Brady is headquartered in Milwaukee, Wisconsin and as of July 31, 2018, employed approximately 6,200 people in its worldwide businesses. Brady’s fiscal 2018 sales were approximately $1.17 billion. Brady stock trades on the New York Stock Exchange under the symbol BRC. More information is available at www.bradycorp.com.
The image below shows the geographical presence of Brady Corporation
Financial overview of Brady Corporation's latest earnings report
The numbers we are interested in (for the quarter):
- Net sales: $295.278 million (down from $297.499 million from the same quarter of the previous year)
- Cost of goods sold : $148.698 million (down from $150.047 million for the same quarter of the previous year)
- Net income: $36.613 million (up from from $34.951 million for the same quarter of the previous year)
- Diluted earnings per share: $0.68 (up from $0.66 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 53.647 million (up from 52.658 million for the same quarter of the previous year)
- PE ratio: 20.8 (based on the earnings for the full year)
- Dividend declared this quarter: $0.21 (unchanged from $0.21 declared for the same quarter of the previous year)
- Dividend yield: 1.59% (based on the dividend declared for the full fiscal year)
- Cash and cash equivalents: $279.072 million
- Cash and cash equivalents per share: $5.2
- Cash and cash equivalents makes up 10.19% of Brady Corporation's current market capital
- Cash and cash equivalents makes up 24.1% of Brady Corporation's total assets
- Accounts receivable: $158.114 million (up from $161.282 million for the same quarter of the previous year)
- Accounts receivable makes up 13.6% of Brady Corporation's total assets
- Accounts receivable declined by -1.96% over the last 12 months
- Cash generated from operations: $131.258 million (for the year)
- Cash generated from operations per share: $2.44
- Total shareholders' equity of Brady Corporation: $850.774 million
- Shareholders' equity per share: $15.85
Brady Corporation's management commentary on the results and earnings guidance
MILWAUKEE, Sept. 06, 2019 (GLOBE NEWSWIRE) -- Brady Corporation (NYSE: BRC) (“Brady” or “Company”), a world leader in identification solutions, today reported its financial results for its fiscal 2019 fourth quarter ended July 31, 2019.
Quarter Ended July 31, 2019 Financial Results:
Income before income taxes was $47.1 million for the fourth quarter of fiscal 2019 compared to $45.2 million for the fourth quarter of fiscal 2018. Income before income taxes included a gain on the sale of the Runelandhs business of $4.7 million in the fourth quarter of fiscal 2018. Net income for the quarter ended July 31, 2019, was $36.6 million compared to $35.0 million in the same quarter last year.
The sale of the Runelandhs business increased net income by $4.7 million in the fourth quarter of fiscal 2018. Earnings per diluted Class A Nonvoting Common Share were $0.68 for the fourth quarter of fiscal 2019, compared to $0.66 in the same quarter last year. Results were increased in the fourth quarter of fiscal 2018 by approximately $0.09 per diluted Class A Nonvoting Common Share due to the sale of the Runelandhs business.
Sales for the quarter ended July 31, 2019 decreased 0.7 percent, which consisted of organic sales growth of 1.7 percent, a decrease in sales of 1.9 percent from foreign currency translation, and a decline in sales of 0.5 percent from the divestiture of our Runelandhs business during the fourth quarter of fiscal 2018. Sales for the quarter ended July 31, 2019 were $295.3 million compared to $297.5 million in the same quarter last year. By segment, sales increased 1.8 percent in Identification Solutions and decreased 7.8 percent in Workplace Safety, which consisted of organic sales growth of 3.3 percent in Identification Solutions and an organic sales decline of 2.6 percent in Workplace Safety.
Commentary:
“Our investment in the development of innovative new products, and our dedication to providing excellent customer service continue to drive positive results as we posted our ninth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “We have seen signs of a weakening industrial economic environment. However, our previous investments along with strong execution have helped us continue to generate organic sales growth in this difficult environment. Our priorities in fiscal 2020 are to continue to launch high-quality new products while further developing our new product pipeline, continue our positive momentum in improving all of our businesses, and execute sustainable efficiency gains throughout Brady. We believe that our actions today will result in continued improvement in our financial results and long-term value for our shareholders.”
“Our organic sales growth and our focus on operational efficiencies continue to drive profit improvements and strong cash flow,” said Brady’s Chief Financial Officer, Aaron Pearce. “Our net cash position increased by $100.1 million this fiscal year, finishing at $228.9 million at July 31, 2019. We generated $162.2 million of cash from operating activities this year, we invested $32.8 million in capital expenditures, and we returned $47.9 million to our shareholders in the form of dividends and share buybacks. Our balance sheet provides significant flexibility for further investments to drive long-term shareholder value and to return funds to our shareholders.”
Fiscal 2020 Guidance:
The Company expects organic sales growth to be approximately 1.5 to 2.5 percent for the year ending July 31, 2020. Brady expects earnings per diluted Class A Nonvoting Common Share to range from $2.45 to $2.55. This guidance is based upon a full-year income tax rate in the low twenties percent range, and depreciation and amortization expense of approximately $25 million. The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses while increasing investments in research and development. Capital expenditures are expected to be approximately $35 million during the year ending July 31, 2020. The Company’s fiscal 2020 guidance is based on foreign currency exchange rates as of July 31, 2019.
Quarter Ended July 31, 2019 Financial Results:
Income before income taxes was $47.1 million for the fourth quarter of fiscal 2019 compared to $45.2 million for the fourth quarter of fiscal 2018. Income before income taxes included a gain on the sale of the Runelandhs business of $4.7 million in the fourth quarter of fiscal 2018. Net income for the quarter ended July 31, 2019, was $36.6 million compared to $35.0 million in the same quarter last year.
The sale of the Runelandhs business increased net income by $4.7 million in the fourth quarter of fiscal 2018. Earnings per diluted Class A Nonvoting Common Share were $0.68 for the fourth quarter of fiscal 2019, compared to $0.66 in the same quarter last year. Results were increased in the fourth quarter of fiscal 2018 by approximately $0.09 per diluted Class A Nonvoting Common Share due to the sale of the Runelandhs business.
Sales for the quarter ended July 31, 2019 decreased 0.7 percent, which consisted of organic sales growth of 1.7 percent, a decrease in sales of 1.9 percent from foreign currency translation, and a decline in sales of 0.5 percent from the divestiture of our Runelandhs business during the fourth quarter of fiscal 2018. Sales for the quarter ended July 31, 2019 were $295.3 million compared to $297.5 million in the same quarter last year. By segment, sales increased 1.8 percent in Identification Solutions and decreased 7.8 percent in Workplace Safety, which consisted of organic sales growth of 3.3 percent in Identification Solutions and an organic sales decline of 2.6 percent in Workplace Safety.
Commentary:
“Our investment in the development of innovative new products, and our dedication to providing excellent customer service continue to drive positive results as we posted our ninth consecutive quarter of organic sales growth,” said Brady’s President and Chief Executive Officer, J. Michael Nauman. “We have seen signs of a weakening industrial economic environment. However, our previous investments along with strong execution have helped us continue to generate organic sales growth in this difficult environment. Our priorities in fiscal 2020 are to continue to launch high-quality new products while further developing our new product pipeline, continue our positive momentum in improving all of our businesses, and execute sustainable efficiency gains throughout Brady. We believe that our actions today will result in continued improvement in our financial results and long-term value for our shareholders.”
“Our organic sales growth and our focus on operational efficiencies continue to drive profit improvements and strong cash flow,” said Brady’s Chief Financial Officer, Aaron Pearce. “Our net cash position increased by $100.1 million this fiscal year, finishing at $228.9 million at July 31, 2019. We generated $162.2 million of cash from operating activities this year, we invested $32.8 million in capital expenditures, and we returned $47.9 million to our shareholders in the form of dividends and share buybacks. Our balance sheet provides significant flexibility for further investments to drive long-term shareholder value and to return funds to our shareholders.”
Fiscal 2020 Guidance:
The Company expects organic sales growth to be approximately 1.5 to 2.5 percent for the year ending July 31, 2020. Brady expects earnings per diluted Class A Nonvoting Common Share to range from $2.45 to $2.55. This guidance is based upon a full-year income tax rate in the low twenties percent range, and depreciation and amortization expense of approximately $25 million. The Company expects to achieve efficiency gains in its manufacturing facilities and in selling, general and administrative expenses while increasing investments in research and development. Capital expenditures are expected to be approximately $35 million during the year ending July 31, 2020. The Company’s fiscal 2020 guidance is based on foreign currency exchange rates as of July 31, 2019.
Brady Corporation (NYSE: BRC) stock price history
The image below, obtained from Google, shows the stock price history of Brady Corporation for the last 5 years. 5 years ago Brady Corporation stock was trading at around $24.50 and its currently trading at $51.05 a stock. So the stock has grown by just over 100% over the last 5 years. Which is very good returns provided to shareholders. The stock is also trading at a lot closer to its 52 week high of $52.51 than it is to its 52 week low of $38.8. A clear indication that the short term sentiment and trend in Brady Corporation stock price is positive.
Recent coverage of Brady Corporation
The extract below was obtained from Zacks Equity Research.
Brady (BRC - Free Report) came out with quarterly earnings of $0.68 per share, beating the Zacks Consensus Estimate of $0.61 per share. This compares to earnings of $0.57 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 11.48%. A quarter ago, it was expected that this identification and security products maker would post earnings of $0.57 per share when it actually produced earnings of $0.65, delivering a surprise of 14.04%. Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Brady, which belongs to the Zacks Security and Safety Services industry, posted revenues of $295.28 million for the quarter ended July 2019, missing the Zacks Consensus Estimate by 1.59%. This compares to year-ago revenues of $297.50 million. The company has not been able to beat consensus revenue estimates over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Brady shares have added about 11.7% since the beginning of the year versus the S&P 500's gain of 18.7%.
Read the original article here
Brady (BRC - Free Report) came out with quarterly earnings of $0.68 per share, beating the Zacks Consensus Estimate of $0.61 per share. This compares to earnings of $0.57 per share a year ago. These figures are adjusted for non-recurring items. This quarterly report represents an earnings surprise of 11.48%. A quarter ago, it was expected that this identification and security products maker would post earnings of $0.57 per share when it actually produced earnings of $0.65, delivering a surprise of 14.04%. Over the last four quarters, the company has surpassed consensus EPS estimates four times.
Brady, which belongs to the Zacks Security and Safety Services industry, posted revenues of $295.28 million for the quarter ended July 2019, missing the Zacks Consensus Estimate by 1.59%. This compares to year-ago revenues of $297.50 million. The company has not been able to beat consensus revenue estimates over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Brady shares have added about 11.7% since the beginning of the year versus the S&P 500's gain of 18.7%.
Read the original article here
Brady Corporation (NYSE: BRC) latest stock valuation
So based on the full year earnings report from Brady Corporation what is our target price for the group? Our valuation models provides a target price for Brady Corporation stock of $50.70. We therefore believe that Brady Corporation is fully priced and doesn't offer any value to long term fundamental or value investors at its current price. We would recommend looking to get into the stock at least 10% below our target (full value) price of $50.70. We would therefore suggest investors look to buy Brady Corporation stock at $45 a share.