Cascade Corporation

Cascade Corporation (CAE), which is a Zacks #1 Rank stock, exceeded analysts’ earnings expectations in five out of the past six quarters, most recently by 18.2%. Consensus estimates have shot upward over the past seven days. The Board of Directors recently declared a quarterly dividend of 15 cents per share and authorized a share repurchase program of up to $80 million over a two-year period. The company has a price-to-book ratio of 1.9, compared to 5.1 for the market.

Full Analysis

Cascade Corporation is a global leader in the design, manufacture and marketing of materials handling equipment and related technologies, primarily for the lift truck industry.

Over the past six quarters, CAE succeeded in beating the Street’s earnings estimate on five occasions. The company’s average margin of surprise during this period of time was 32.6%.

Second-quarter fiscal 2007 profits came in at $11.9 million, or 91 cents per share. With analysts expecting 77 cents, CAE topped expectations by 18.2%. Compared to the 84 cents reported in the prior-year period, earnings were up 8.3%. Net sales jumped 3.8% to $119.4 million versus $115.0 million for the second quarter of fiscal 2006.

Earnings per share grew 24.9% over the past five years. CAE increased revenues, expanded gross margins and grew profits over the past four years.

Consensus estimates have experienced a dramatic increase over the past seven days. For this quarter and next quarter, estimates soared 26.4% and 19.4%, respectively. Profit forecasts for fiscal 2007 and fiscal 2008 increased 15.7% and 7.3%, respectively, over the past week.

The Board of Directors has been very active in its efforts to increase shareholder value. On Sep 5, a quarterly cash dividend of 15 cents per share was announced. The dividend will be paid on Oct 20 to shareholders of record as of Oct 3. The company is currently yielding 1.4% and has a five-year average dividend yield of 1.5%. Furthermore, the Board authorized a share repurchase program of up to $80 million over a two-year period.

CAE is currently trading at a valuation of 13.7x trailing 12-month earnings and at 12.5x current fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 16.4x trailing 12-month earnings and at 15.5x its current fiscal-year estimated earnings.

The company has a price-to-book ratio of 1.9, compared to 5.1 for the market. CAE’s return on equity trumps that of the industry average—15% compared to 10%.