You might think that with President Obama pushing his administration to enact greenhouse gas emission caps, a company involved in the production of these products would be growing like wildfire. Well not so fast ...

Last week, Peerless Manufacturing (Nasdaq: PMFG) reported a $0.15 quarterly loss as compared to a $0.20 profit at this time last year largely because of lower revenues and rising expenses. So what happened next? You guessed it -- the stock price rose!

I'm not as impressed with Peerless as the rest of the market. Take a look at some of the company's numbers to see why:


Fiscal 2010

Fiscal 2009

Fiscal 2008

Fiscal 2007

Operating Expenses










In millions.

Expenses related to raw material costs are rising quicker than Peerless can cut other costs. The cost of the steel it uses in its gas filtration products is slowly creeping higher, and thus far it has been unable to pass along those higher costs to customers.

On top of this, Peerless has been unable to muster any growth in either of its business lines. Sure, backlog may have improved over the last couple of quarters, but Peerless has watched revenues fall 23% for environmental systems and 27% for process products in 2010.

Furthermore, a side-by-side comparison with closest competitor Clarcor (NYSE: CLC) reveals just how pricey Peerless has become.

Clarcor trades at 2.67 times book value, approximately 22 times earnings, and pays out a handsome 1.2% dividend. Peerless offers no dividend, trades in excess of 4 times its book value, and is currently losing money.

Peerless had better learn how to adjust to rising raw material costs by aggressively targeting customers in the natural gas sector, or it could find itself getting drilled by investors.

More on Peerless:

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community.  

Fool contributor Sean Williams does not own shares in any companies mentioned in this article. You can follow him on CAPS under the screen name UltraLong. Try any of our Foolish newsletter services free for 30 days. The Motley Fool has a disclosure policy.