Calumet Specialty Products Partners, L.P.

Calumet Specialty Products Partners, L.P. (CLMT - Snapshot Report) recently beat the Street’s second-quarter earnings estimate by 14.6% when it posted profits of 94 cents per share. The result represented a 25.3% year-over-year improvement. Consensus earnings estimates for both this year and next year have risen over the past week. On Jul 13, the Board of Directors approved an increase to the company’s quarterly cash distribution to 63 cents per unit. This Zacks #1 Rank stock has a price-to-book ratio of 2.4, compared to 4.6 for the market and 2.9 for the industry.

Full Analysis

Calumet Specialty Products Partners, L.P. is a leading independent producer of high-quality, specialty hydrocarbon products in North America. CLMT processes crude oil into customized lubricating oils, solvents and waxes used in consumer, industrial and automotive products. The company also produces fuel products including gasoline, diesel and jet fuel.

On Aug 7, CLMT reported second-quarter profits of 94 cents per share, compared to 75 cents per share in the prior-year period. In addition to the 25.3% year-over-year improvement, the result equated to a 14.6% positive earnings surprise with analysts calling for 82 cents per share. This marked the second quarter out of the past three in which CLMT beat the Street’s estimate. Profits for the first half of the year came in at $65.6 million, compared to $27.4 million for the same period in 2006.

President and CEO Bill Grube stated, "We improved upon our overall performance in the second quarter of 2007 compared to the second quarter of 2006 primarily through increased gross profit in our Fuel Products segment."

Analysts’ optimism about CLMT’s future earnings prospects has been on the rise. The consensus earnings estimate for this year currently sits at $3.48. This marks an 11-cent jump when compared to the consensus of only a week earlier. Two of the three covering analysts upped their projections. Looking ahead to next year, the consensus estimate currently resides at $3.79. It represents a 19-cent increase over the same period of time. An upward revision was submitted by one analyst. Earnings per share are projected to grow 10% over the next 3-5 years.

On Jul 13, the Board of Directors approved an increase to the company’s quarterly cash distribution to 63 cents per unit. The dividend will be paid on Aug 14 to shareholders of record as of Aug 4. CLMT has a very impressive current dividend yield of 5.3%. The current increase represents the company's third increase in its quarterly distribution in only its fifth full quarter of operations.

CLMT is currently trading at a valuation of 13.6x current fiscal-year estimated earnings and at 12.5x next fiscal-year estimated earnings. The market, as represented by the S&P 500, is trading at a valuation of 15.5x current fiscal-year estimated earnings and at 14.4x next fiscal-year estimated earnings. The company has a price-to-book ratio of 2.4, compared to 4.6 for the market and 2.9 for the industry.