Recs

2

Will Clarcor Earnings Keep Shares Soaring?

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Clarcor (NYSE: CLC  ) will release its quarterly report on Wednesday, and the filtration specialist has seen extremely strong share-price performance lately, sending its stock to record highs. With fairly high expectations for Clarcor's earnings growth, the company will need to work hard to satisfy increasingly optimistic investors who want to see big things from the small but growing industrial niche player.

Clarcor has focused its efforts on filtering and cleaning systems designed to help equipment function more efficiently. In addition to air cleaners and water filters, Clarcor makes more sophisticated filtration equipment for use within engines and in industrial machinery. Those systems have become more important as their use in fast-growing areas like the energy sector has prompted greater demand, but how much can Clarcor cash in? Let's take an early look at what's been happening with Clarcor over the past quarter, and what we're likely to see in its report.

Stats on Clarcor

Analyst EPS Estimate

$0.66

Change From Year-Ago EPS

10%

Revenue Estimate

$298.74 million

Change From Year-Ago Revenue

4.2%

Earnings Beats in Past 4 Quarters

2

Source: Yahoo! Finance.

Can Clarcor earnings clean up this quarter?
Analysts have reduced their views on Clarcor earnings somewhat in recent months, with a $0.02-per-share cut in August-quarter estimates, and double that reduction for the full fiscal year. The stock has still moved modestly higher, though, with about a 5% rise since mid-June.

Initially, Clarcor investors had to deal with a disappointing earnings report from the previous quarter, which sent the stock down more than 5%. Despite reporting record earnings per share, the company's revenue and net income both rose less than 1%, as poor sales from its packaging segment offset strength in its engine and industrial/environment filtration businesses. Clarcor blamed the European recession, sluggish growth in the U.S., and uncertain conditions in China for holding back overall results.

That's consistent with the results rival Donaldson (NYSE: DCI  ) posted in its July quarter, where its net jump of 2% in earnings was enough to set a record, even though sales fell 4%. Donaldson relied on cost cutting to improve operating margins and keep net income up even as revenue declined.

The key area of strength for Clarcor has been energy-related sales. Strong order backlogs and an 8% jump in oil and gas filtration sales reflect the vast amounts of energy exploration and production activity going on around the world. That focus gives Clarcor a significant advantage over Pall (UNKNOWN: PLL.DL  ) , which has seen sales drop in its industrial segment because of Pall's focus on aerospace, microelectronics, and broader-scale systems. Pall saw greater growth in its Life Sciences segment, an area that Clarcor hasn't stressed, and which has helped the two stocks produce similar returns over the past year.

One outstanding question remains: the extent to which larger competitors will start eating into Clarcor's business. 3M's (NYSE: MMM  ) Ceradyne division has the potential to become a much larger player in the energy space, with its PetroCeram sand-screen ceramic filters offering advantages over metals-based filtration systems. Meanwhile, General Electric (NYSE: GE  ) announced an Arizona project in July to provide the treatment technology for a drinking-water plant, winning a local award and showing the extent to which cleaning and filtration remain essential parts of functioning infrastructure. Clarcor has growth opportunities in those areas, but it needs to stand up to bigger players and assert its strength in the niche.

In the Clarcor earnings report, look to see how well the company can do at trying to boost revenue even under tough conditions. The better Clarcor can do -- even in a challenging environment -- the more promising its prospects will be once global economic growth gets back on firmer footing.

Filtration is important in the industrial world, but there's one trend that promises to completely change the way the manufacturing industry operates. Read all about the biggest industry disrupters since the personal computer in 3 Stocks to Own for the New Industrial Revolution. Just click here to learn more.

Click here to add Clarcor to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.


Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2639961, ~/Articles/ArticleHandler.aspx, 9/28/2016 10:32:15 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,248.61 20.31 0.11%
S&P 500 2,159.14 -0.79 -0.04%
NASD 5,305.70 -0.01 0.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/28/2016 10:14 AM
CLC $64.26 Up +0.27 +0.42%
CLARCOR CAPS Rating: ***
DCI $37.18 Up +0.23 +0.62%
Donaldson CAPS Rating: ***
GE $29.73 Down -0.15 -0.50%
General Electric CAPS Rating: ****
MMM $177.17 Up +0.87 +0.49%
3M CAPS Rating: ****
PLL.DL $0.00 Down +0.00 +0.00%
Pall CAPS Rating: **