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Rockwood Holdings, Inc.

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The specialty chemical companies are still optimistic about 2012. Rockwood Holdings, Inc. (ROC) recently reported first quarter results and blew by the Zacks Consensus by 19.6%. This Zacks #1 Rank (Strong Buy) is even cheaper than last year, as it now has a forward P/E of 12.2.

Rockwood is a global specialty chemical manufacturer with 10 different business segments including high performance ceramics, lithium-based chemicals and fine chemicals. It has 81 manufacturing facilities in about 2 dozen countries.

Additionally, it makes rubber, high purity inorganic metallic salts (which are used in the oil fields, textiles and agriculture), pigments, and titanium dioxide.

The company is also one of Europe's biggest suppliers of flocculants for water treatment and it also makes specialty additives as well as wood protection products.

Rockwood Beat in Q1

On Apr 25, Rockwood reported its first quarter results and surprised on the Zacks Consensus for the third time in four quarters. Earnings per share were $1.22 compared to the consensus of $1.02. That is a 39.8% increase from the first quarter of 2011 which was just 88 cents.

Sales actually declined by 0.5% to $909.5 million from $914 million a year ago. It was a mixed bag with 3 out of the 5 top segments reporting sales gains, while the other two declined.

Lithium sales rose 1.2% due to higher volumes of lithium battery products.

Surface Treatment was up 3.4% from increased selling prices in some markets and higher demand in the U.S. and Asia, especially in the general industrial and aerospace industries.

Advanced Ceramics was the largest decliner, falling 6.2% compared to a year ago.

Outlook for 2012

Rockwood is still optimistic about the rest of 2012.

It expects the battery grade lithium business to show double-digit sales growth. The Surface Treatment business is also expected to have stronger volumes.

The 2012 Zacks Consensus Estimate Jumps

The analysts like what they heard in the report.

3 out of 6 estimates have risen in the last week for 2012 which has pushed the Zacks Consensus up to $4.58 from $4.45 per share.

That is earnings growth of 13.8% as Rockwood only made $4.02 last year.

Still a Value Stock

Shares have been on a tear since the end of the Great Recession but have been rockier in the last year. They have yet to retake 2011 highs.

Still, there's plenty of value. The P/E of 12.2 is below that of its peers at 14x.

It also has a price-to-book ratio of 2.4. A P/B ratio under 3.0 usually means there is value.

In addition, Rockwood has a stellar 1-year return on equity (ROE) of 20.2%. That is higher than its peers at 19.5%.

For value investors, Rockwood offers a solid valuation and double digit earnings growth. Not a bad combination.

Tracey Ryniec is the Value Stock Strategist for She is also the Editor of the Turnaround Trader and Insider Trader services. You can follow her on twitter at @TraceyRyniec.

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