Citigroup's
Take filtration company Clarcor
Clarcor posted its 16th consecutive year of top-to-bottom-line growth. Growing seems to be a common theme in the filtration industry. Competitor Donaldson
Trailing P/E |
PEG |
EV/EBITDA |
5-Year Expected EPS Growth |
|
---|---|---|---|---|
Clarcor |
17.4 |
1.86 |
9.71 |
9.3% |
Donaldson |
14.5 |
1.22 |
8.90 |
11.8% |
Pall |
14.8 |
1.03 |
7.00 |
13% |
Data as of Jan. 15, 2009.
P/E = price to earnings ratio; PEG = price/earnings to growth ratio; EV = enterprise value; EBITDA = earnings before interest, taxes, depreciation, and amortization; EPS = earnings per share.
Must be something in the water
The success of these filtration companies is remarkable. And considering their close ties to the auto parts industry, it's somewhat surprising as well. But the products these companies make are also used by those in industries including oil and natural gas exploration, aircraft, mining, and construction. They have environmental applications as well.
Compared to the other two, Clarcor doesn't use a high degree of financial leverage to generate EPS growth, which is refreshingly conservative. Another of Clarcor's strengths is its ability to consistently generate positive free cash flows, and its gross cash from operations almost never falls below net income.
Investors can take comfort in the fact that as long as there is a need for energy, transportation, and clean water, filters and filtration systems will be in demand -- and companies like Clarcor will continue to turn that demand into profits.
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Chris Jones has neither long nor short positions involving any company mentioned in this article. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool's disclosure policy admires raindrops on roses.