Hawk Corporation

Hawk Corporation (HWK) recently set a new 52-week high after an excellent second-quarter earnings report. The company has increased guidance and remains attractively priced with a PEG ratio of only .39.

Company Description

Hawk Corporation designs, manufactures, and sells friction materials for brakes, transmissions, and clutches. The company operates through its subsidiaries and supplies its products to the aerospace, automotive, and agricultural industries. The company is headquarters in Cleveland, Ohio, has approximately 1,200 employees, and carries a market cap of $220 million.

Second-Quarter Earnings Smash Estimates

Hawk reported second-quarter results on August 7th, which included earnings per share of 66 cents, well above the consensus of 28 cents. Net income for the quarter was $6.2 million, a 226% year-over-year increase, up from $1.9 million.

The excellent results were driven by record net sales, $71.8 million up from $55.3 million in the same quarter last year. The 29.8% increase is attributed to strong economic conditions for its end users and beneficial foreign exchange rate changes as well as several other factors.

A Positive Outlook

Hawk has also increased its full-year estimates for operating income and net sales. Operating income is now expected to be between $28 and $30 million, a 44% to 54% increase from 2007.

The full-year estimate for net sales is now between $255 and $260 million compared to 2007 net sales of $216 million.

Favorable Industry Comparison

The projected earnings growth for the next five years is 40.0%, well above the industry average of 12.8%. Despite the high growth rate, Hawk remains reasonably priced with a PEG ratio of .39, compared to the industry average of 1.1.

The Chart

Shares of HWK have increased over 20% since the August 7th announcement. The stock is currently trading just under the 52-week high of $25.14, which was set in late August. Take a look at the chart below.

Read the full analyst report on HWK