Jarden's Simmering Improvements

Shares of branded-consumer-products company Jarden (NYSE: JAH  ) have been on a tear for the last three years, rising from $3 to $42. The company's stated goal to double 2004's adjusted earnings of $1.47 by 2008 certainly hasn't hurt that rise.

Yet the stock is setting a new 52-week low of $26.50 Thursday, after the company announced that it hit a bump in its latest quarter. Analysts expected Jarden to earn $2.24 for the year. Instead, the company expects 2005 earnings to fall between $2.10 and $2.14 a share.

Blame for the shortfall partly rests with lower-than-expected results at the recently acquired Holmes units, owner of such brands as Crock-Pot slow-cookers, Rival roasters, and Bionaire air purifiers. Also falling short was the company's core FoodSaver line.

Fool contributor Brian Gorman sounded a cautionary note in June. He noted the significant increase in the company's long-term debt needed to fund two major acquisitions in seven months, and the related business impact of trying to integrate these back-to-back buys into its operations. The caution was justified -- as was his outlook that Jarden's was a winner.

True, the stock has been deflated by today's bad news. But based on the low end of its updated guidance, and its mid-afternoon price, Jarden now trades at a P/E of 13. That multiple is a discount to the 16% annual earnings growth analysts expect.

Investors willing to consider a high-debt company that has proven adept at making accretive acquisitions should listen to today's conference call. The company is refreshingly upfront about its current problems, its debt, its outlook, and its commitment to buy its own stock if it offers the best total return.

Jarden's long-term organic growth target is 3% to 5%, but the company expects to see 2006 earnings growth of "at least 15%." In 2007, it expects to deliver the biggest impact from its operational improvement program and new products.

Jarden's products are distributed through many retail channels, from Wal-Mart (NYSE: WMT  ) to Motley Fool Inside Value pick Home Depot (NYSE: HD  ) to Kroger (NYSE: KR  ) . Many of Jarden's products hold leading market positions, so the company offers major clients one-stop shopping for brand names to fill their shelves.

Add it up. Jarden is on the discount rack at the NYSE today. But given the earnings multiple and the longer-term growth rate, I'd say there's reason for value investors to give this company more than just passing attention.

Looking for more great companies unfairly marked down by the market?Motley Fool Inside Valuecan help you find Wall Street's best bargains. Sign up today for a 30-day free trial.

Fool contributorW.D. Crotty owns shares in Home Depot.Clickhereto see The Motley Fool's disclosure policy.

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