Back to top

Here's Why it is Worth Investing in Brady (BRC) Stock Now

Read MoreHide Full Article

Investors seeking exposure in the security and safety services provider space can choose from stocks that don favorable Zacks Rank #1 (Strong Buy) or #2 (Buy). Of the many investment options, we believe that Brady Corporation (BRC - Free Report) will be a smart choice. The stock currently carries a Zacks Rank #2.

The industry to which Brady belongs is currently positioned in the top 44% of more than 250 Zacks industries. Per our research, the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1. We believe that the industry gains from increase in industrial activities worldwide as well as growing awareness for safety and security of work facilities, and workers.

Below we discussed why investing in Brady will be a smart choice for investors.

Share Price and Earnings Performances, Robust Bottom-Line Outlook: Market sentiments seem to be working in favor of Brady over time. In the past year, the company’s share price increased by 11.3% against the industry’s decline of 38.9% and the Zacks Industrial Products sector’s decrease of 24%.





It’s worth mentioning here that the company’s shares gained nearly 1.3% in the past three months. In the last reported quarter (ended October 2018), the company’s earnings of 58 cents per share surpassed the Zacks Consensus Estimate of 53 cents by 9.43%. Including this earnings beat, the average of the last four quarters was a positive 7.04%.

In addition, earnings estimates on the stock have been revised upward in the past 90 days. Currently, the Zacks Consensus Estimate for earnings is pegged at $2.28 for fiscal 2019 (ending July 2019) and $2.47 for fiscal 2020 (ending July 2020), reflecting growth of 3.6% and 2.9% from the respective tallies 90 days ago. Further, these estimates represent year-over-year growth of 11.8% for fiscal 2019 and 8.3% for fiscal 2020.

Brady Corporation Price and Consensus

 

Brady Corporation Price and Consensus | Brady Corporation Quote

For fiscal 2019, Brady anticipates gaining from robust sales performance, wide geographical presence and efforts to drive operational excellence. It now anticipates earnings per share of $2.20-$2.30, higher than the previous forecast of $2.15-$2.25 and earnings of $1.73 per share recorded in fiscal 2018 (ended July 2018).

Revenues — Segmental Business Strong: Brady’s revenues in the first quarter of fiscal 2019 expanded 1% year over year, with organic sales growth coming in at 4.7% on the back of healthy results of its two segments — Identification Solutions and Workplace Safety.

Brady stands to gain from its expertise in providing innovative solutions to its wide customer base in various geographical regions. The company anticipates organic sales growth of 3-5%, including organic growth of 4-5% for the Identification Solutions segment and 1-3% for the Workplace Safety segment, in fiscal 2019.

The Zacks Consensus Estimate for the company’s revenues is pegged at $1.19 billion for fiscal 2019 and $1.23 billion for fiscal 2020, reflecting year-over-year growth of 1.1% and 3.4%, respectively.

Capital-Allocation Strategies: Brady uses its capital for product development, capacity expansion, acquisitions, dividend payments and rewarding shareholders handsomely. A brief discussion on dividend payments is provided below.

In the first quarter of fiscal 2019, the company paid dividends, totaling $11.1 million, to its shareholders. It’s worth mentioning here that in September 2018, it increased its annual dividend rate by 2.4% to 85 cents. This increment was the company’s 33rd annual hike. The quarterly dividend rate is now at 21.25 cents.

Debt Profile: Brady’s long-term debt at the end of the first quarter of fiscal 2019 was $54 million. The company’s debt profile is better than the industry. Its debt/equity of 7% is significantly lower than the industry’s 66.4%.

Other Stocks to Consider

Some other top-ranked stocks in the sector are Ituran Location and Control Ltd. (ITRN - Free Report) , DXP Enterprises, Inc. (DXPE - Free Report) , and Colfax Corporation (CFX - Free Report) . While both Ituran Location and DXP Enterprises currently sport a Zacks Rank #1, Colfax carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

In the past 60 days, earnings estimates for each of these stocks improved for 2019. Further, positive earnings surprise for the last quarter was 30.43% for Ituran Location, 17.95% for DXP Enterprises and 3.85% for Colfax.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>



More from Zacks Analyst Blog

You May Like