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Worthington Industries, Inc.

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Worthington Industries, Inc. (WOR - Free Report) recently had a solid fourth quarter report stemming from a strong performance out of its pressure cylinder business. The Ohio-based metal processor beat the Zacks Consensus Estimate by 42.6% in the quarter, marking its fourth positive earnings surprise over the last six quarters. With a price-to-sales (P/S) ratio of just 0.6, this Zacks #1 Rank (Strong Buy) is a good play for value investors.

Huge Beat in 4Q

Worthington reported strong fourth-quarter fiscal 2012 results (ended May 31) on June 28 with adjusted earnings of 77 cents per share, crushing the Zacks Consensus Estimate of 54 cents. Revenues shot up 12% year over year to $755.4 million on the heels of a higher average selling price, increased volume and synergies of acquisitions.

The company’s Pressure Cylinders division had a solid quarter with revenues jumping 29% year over year to $236.8 million thanks to acquisitions and a better sale mix. Volumes spiked 45.8% to 24,011 units. However, sales in the core Steel Processing unit were clipped marginally to $429.6 million on lower pricing.

Worthington hopes to continue its earnings momentum moving ahead. The company expects the economy to improve slowly and its core businesses to benefit from its growth strategies, which include acquisitions and expansion in product lines and markets.

Estimates Climbing

For fiscal 2013, five out of seven estimates have been revised higher in the last 30 days, pushing the Zacks Consensus Estimate upward by 8.6% to $2.14. This suggests an annualized growth of roughly 25.9%. Two estimates out of five have moved higher for fiscal 2014 over the same period. The Zacks Consensus Estimate is up 5.2% to $2.43 per share, representing an estimated year-over-year growth of roughly 13.6%.

A Value Play

The price chart below shows that Worthington’s shares took a sharp tumble back in September 2011 when concerns of slowing global economic growth and fears of a European debt crisis led to a selloff in stocks. Following a series of peaks and troughs, the stock has recently begun to gather momentum, thanks in part to the upbeat fourth quarter results.

Worthington has plenty of reasons to be labeled as a value stock. In addition to having a low P/S, the stock has a forward P/E ratio of just 10.2. It also has a price-to-book (P/B) ratio of 2.0. (A P/S ratio lower than 1.0, a P/E below 15.0 and a P/B ratio under 3.0 generally indicate value.) Moreover, the company offers a commendable dividend yield of 2.4% and has a 1-year ROE of 17.2%, which is higher than its peer group average of 10%.

Founded in 1955, Worthington Industries is engaged in processing steel for application in the automotive, construction, hardware, agricultural, aerospace and other industries. The company, which has a market cap of roughly $1.47 billion, makes a range of processed steel items, pressure cylinders (including oxygen and helium tanks and hand torches), metal framing products, racks, shipping pallets, airbrake tanks and consumer products. The company operates 80 facilities throughout 12 nations and has annual revenues of roughly $2.5 billion.

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