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Medical Action Industries Inc. (MDCI) has attractive valuations. It is trading at 12.7x earnings which is well under the industry average of 21.3.

Medical Action Industries manufactures disposable medical products including Operating Room Disposable supplies, Containment Systems for Medical Waste, Minor Procedure Kits and Trays, Bedside Products and supplies for medical laboratories.

Its customers are primarily acute facilities but it has expanded to include physician, dental and veterinary offices, out-patient surgery centers and long-term care facilities.

Medical Action Industries Surprised for the 4th Quarter in a Row

On June 2, Medical Action Industries reported fiscal fourth quarter 2010 results and beat the Zacks Consensus by 25%. Earnings per share were 30 cents compared with the consensus of 24 cents. It reported just 11 cents in the year ago period.

Sales, however, dipped 2% to $71.2 million from $72.9 million in the year ago quarter. The reason that EPS was up significantly while sales slipped compared to last year was that the company benefited from lower raw material costs and also fixed production issues in the Gallaway, Tennessee manufacturing facility.

It was able to eliminate its backorders and keep the cost of products from China at stable prices which added to the bottom line.

The company also paid down debt during the quarter.

Zacks Consensus Estimates Rise

Medical Action Industries did not provide guidance for fiscal 2011. Given the fourth straight earnings surprise, analysts moved to revise estimates higher.

The fiscal first quarter Zacks Consensus Estimate rose a penny to 23 cents in the last month.

The fiscal 2011 Zacks Consensus Estimate also jumped by 5 cents to 94 cents in the prior 30 days with 2 out of 3 estimates moving higher during that time.

Other Value Credentials

The company already has a forward P/E that would be considered a "value" indicator. It also has a price-to-book ratio of just 1.4, which is also within value parameters and well under the industry average of 2.5.

Medical Action Industries price-to-sales ratio also flashes "value" at just 0.7. The industry average is 2.3.

Additionally, the company has a one year return on equity (ROE) of 12.6%, besting the industry which averages 6.7%.

Medical Action Industries is also a Zacks #1 Rank (strong buy) stock.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor in charge of the market-beating Zacks Value Trader service.

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