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After 153 years in business, Gardner Denver, Inc. (GDI) had a record year in 2011, boosted by strong business in the energy sector. Can it do it again in 2012? Despite the record year, this Zacks #1 Rank (Strong Buy) also still has attractive valuations, with a forward P/E of 11.8.

Gardner Denver manufactures highly engineered products including reciprocating, rotary and vane compressors, liquid ring pumps and blowers for various industrial and transportation applications.

It also makes pumps used in the petroleum and industrial market segments, and other fluid transfer equipment serving chemical, petroleum, and food industries.

Gardner Denver Beat by 2 Cents in the Fourth Quarter

On Feb 9, Gardner Denver reported its fourth quarter results and kept its remarkable earnings surprise streak alive. It beat the Zacks Consensus Estimate for the 10th consecutive quarter. Earnings per share were a record $1.54 compared to the consensus of $1.52. This was a 36% increase over the fourth quarter of 2010 when it earned just $1.08.

Revenue jumped 16% to $613.7 million from $530 million a year ago boosted by the strong energy sector and its later cycle businesses in the Engineered Products Group.

Both of its business segments saw growth in the fourth quarter but Engineered Products Group's revenue surged 27% in the fourth quarter due to strong demand for drilling and well servicing pumps and growth in the emerging markets. For the year, revenue jumped 29%.

The Industrial Products Group's growth was slower, rising just 4% in the fourth quarter and 6% for the full year. The growth came from steady demand for OEM products and aftermarket parts and services.

Conservative Outlook on 2012

After a record 2011 but with Europe still in crisis, Gardner Denver was conservative about 2012. It still expects growth, led by the energy and later cycle Engineered Products Groups businesses but is "cautious" on the outlook for the Industrial Products Group, especially in Europe.

Full year earnings are expected in the $6.00 to $6.20 range.

2012 Zacks Consensus Estimate Rises

Since the earnings report, the 2012 Zacks Consensus has jumped to $6.17 from $6.12, which is at the high end of the company's guidance range.

That is earnings growth of 11.9% as the company made $5.51 per share in 2011.

The Value Is Still There

Shares have yet to regain 2011 highs after the summer sell-off. The recent earnings report doesn't seem to have lit a fire under the stock either.

Despite a record year in 2011, Gardner Denver remained a value stock throughout the year. It also starts off 2012 with the same designation.

In addition to a P/E of 11.8, which is well under the 15x cut-off I use for value stocks, the company also has a price-to-book of 2.9.

The P/B ratio is just below the level I use to find value, however, which is a P/B ratio of 3.0.

Gardner Denver also has a solid 1-year return on equity (ROE) of 21.8%, well above the S&P 500 average of 13.6%.

Shareholders will also get a small dividend, currently yielding 0.3%, but investors don't buy this stock for the yield.

With the energy sector remaining hot, Gardner Denver expects 2012 to continue to build on 2011's record year. With attractive valuations, its a way to play the energy sector while also getting exposure to other industrial areas.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at traceyryniec.

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