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Analyst Blog

Raven industries, Inc. (RAVN - Analyst Report)) is scheduled to report its fourth quarter and year end 2011 financial results before the market opens on March 13, 2012. The current Zacks Consensus Estimate for the quarter is pegged at 48 cents per share, representing an estimated year-over-year increase of about 17.1%. Revenue, as per the Zacks Consensus Estimate stands at $78 million.

Third Quarter Synopsis

Raven’s third quarter earnings per share came in at 63 cents, in line with the Zacks Consensus Estimate. Earnings, however, dropped 35% from the year ago 65 cents per share.

Net revenue for the quarter came in at $93 million, up 8.7% from $86 million in the year-ago quarter. This also came in line with the Zacks Consensus Estimate.

Raven Industries, which competes with Graco Inc. (GGG - Snapshot Report) and Spartech Corp. , despite registering a growth in its top line, experienced a drop in the bottom line due to an 8% increase in the cost of sales and 45% increase in selling, general and administrative expenses.

Agreement of Estimate Revisions

Only 1 analyst is covering the stock and he has neither upgraded nor downgraded fourth quarter estimates in the last 30 days. Fiscal 2011 estimates remained the same. The absence of estimate revisions indicates that the analyst does not perceive any major catalyst driving the quarterly results.

Magnitude of Estimate Revisions

The Zacks Consensus Estimates for the fourth quarter and fiscal 2011remained the same over the last 7 days.

Earnings Surprise

With respect to earnings surprises, Raven has performed in line and has also topped the Zacks consensus Estimate over the trailing four quarters. The average earnings surprise was a positive 22.23%. This implies that the company has beaten the Zacks Consensus Estimate by the same magnitude over the last four quarters.

Our Take

The Applied Technology and Engineered Films division are both experiencing strong sales momentum over the quarters. Sales in the Aerostar division dropped in the third quarter of 2011. However, the new contract of $6 million received in September is expected to deliver better performance in the fourth quarter of the year. Soaring costs, however, remain a problem for the company.

Currently, Raven holds a Zacks #3 Rank, which implies a short-term “Hold” rating. However, our long-term recommendation on the stock remains Outperform due to the better performance in the third quarter of 2011 and promising outlook.

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