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Steinway Musical Instruments

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Steinway Musical Instruments, Inc (LVB) estimates have plenty of confidence after the last quarterly report. They actually missed expectations by a penny, but sales were up and the future is looking good for this Zacks #1 Rank (Strong Buy).

Company Description

Steinway Musical Instruments is a global manufacturer of musical instruments, as you may have guessed from the name. They also have some real estate leasing operations in New York.

Sales Up 6%

On May 9 the company reported first-quarter sales at $73 million, up 6% from last year. Unfortunately, earnings came in at $0.06 per share which was a penny less than expected. Earnings were weighed on by the real estate group, bringing EPS down 9 cents.

However, the company had encouraging things to say. "We are seeing a nice recovery and the steps taken to lean out our cost structure are having a noticeable effect on our results. We delivered solid growth in sales and gross margins, both domestically and overseas."

Enough for Analysts

On the earnings news analysts quickly raised their earnings outlook. The full-year consensus for 2011 jumped 22 cents, to $1.19. Next year's projections average $1.57, up 56 cents on the news. Last year Steinway made $0.67, putting forecasted growth rates at 77% and 32%, respectively.

Valuation Picture

Shares are trading at about 20 times the forward estimates right now. Not too bad, but the price to sales at 0.9 and price to book of 1.2 are showing a solid value. The PEG is pretty neutral, at 1.3 times.

Turning Around

Overall the earnings outlook has been flat for LVB over the past couple of years. However, we could be at the beginning of a resurgence. Given the highly discretionary market they are in, they should bounce back later in the overall economic recovery. Is that time now?

Steinway Musical Instruments, Inc  - ticker LVB>

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