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Analyst Blog

Shares of Pall Corp. (PLL - Analyst Report) reached a 52-week high of $87.24 on Thursday, Mar 6, 2014. However, the stock closed at $87.24, representing a one-year return of about 28.06% and a year-to-date return of about 3.26%. Average volume of shares traded over the last three months is approximately 5, 32,617.

Pall’s strong Industrial end markets, improved operational execution, favorable impact of the structural cost actions and reasonably strong second-quarter 2014 results are some of the growth catalysts for the company.

Pall delivered positive earnings surprises in the last four quarters with an average beat of 1.90%. This Zacks Rank #3 (Hold) company has a market cap of $9.62 billion and long-term expected earnings growth rate of 12.9%.

Pall’s Strengths

Pall Corp. enjoys remarkable financial returns and reasonable growth prospects due to several factors, including its superior technology, reliable global distribution, notable acquisition strategy, high share in market niches, long and close working histories with customers, few competitors and solid product quality supplemented by technical service. The company’s biopharmaceutical business is expected to grow significantly in the long run driven by increased funding in biotechnological research, rising demand for single use and disposable products and an increasing number of drugs and vaccines getting approved over time.

Cost reduction and restructuring initiatives taken by the company have resulted in encouraging revenues and orders. Pall Corporation appears to be taking a more determined approach to cost management through its business realignment and core programs. The company saved $50 million during fiscal 2013 by reducing (SG&A) expenses along with other costs. It expects to save another $50 million in the next couple of years. Further, the company has also divested one of its businesses dealing in non-core Blood product lines, while having acquired a strategically fit LifeSciences business.

Modest 2Q14 Earnings

Pall Corporation reported fiscal second-quarter 2014 (ended Jan 31, 2014) pro forma earnings of 82 cents a share, 2.5% above the Zacks Consensus Estimate of 80 cents. Earnings for the quarter also beat the prior-year quarter's earnings of 73 cents a share by 12%. The reported earnings per share (EPS) included a 4 cent negative impact of foreign currency translation.

Total revenue in the quarter increased 2.2% year over year to $677.0 million, primarily attributable to modest Life Sciences sales and an improvement in the Industrial business.

Estimate Revisions

Over the last 7 days, 3 of the 9 estimates have been revised upward for the next quarter, while for fiscal 2014 and 2015, 1 of 11 estimates has been revised upward. However, the Zacks Consensus Estimate remained stagnant at $1.06 for the next quarter and at $3.14 for fiscal 2014.

Conclusion

The company is expected to deliver an upbeat performance in fiscal 2014 driven by recovering economic conditions and the strategic initiatives taken by it, including increased investments in R&D and innovation.

Other Stocks to Consider

Investors interested in the pollution control sector can consider Sharps Compliance Corp. (SMED - Snapshot Report) holding a Zacks Rank #1 (Strong Buy), and Pure Cycle Corp. and Tetra Tech Inc. (TTEK - Analyst Report), both carrying a Zacks Rank #2 (Hold).  

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