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Clarcor Earnings: An Early Look

By Dan Caplinger – Mar 18, 2013 at 10:11AM

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Let's look forward to this industrial filtration system maker's next earnings report.

Earnings season is winding down, with most companies already having reported their quarterly results. But there are still some companies left to report, and Clarcor (CLC) is about to release its quarterly earnings report. The key to making smart investment decisions with stocks releasing their quarter reports is to anticipate how they'll do before they announce results, leaving you fully prepared to respond quickly to whatever inevitable surprises arise. That way, you'll be less likely to make an uninformed knee-jerk reaction to news that turns out to be exactly the wrong move.

Clarcor makes filtration systems for industrial machinery and engines, as well as air cleaners, water filters, and energy-related products. 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 quarterly report on Wednesday.

Stats on Clarcor

Analyst EPS Estimate

$0.46

Change From Year-Ago EPS

0%

Revenue Estimate

$258.5 million

Change From Year-Ago Revenue

0.5%

Earnings Beats in Past 4 Quarters

1

Source: Yahoo! Finance.

Will Clarcor clean up this quarter?
Analysts have become more pessimistic about Clarcor's earnings prospects over the past few months. They've cut their earnings-per-share estimates for both the most recent quarter and the full 2013 fiscal year by $0.06. But the stock hasn't missed a beat, rising nearly 19% since mid-December on hopes that improving economic conditions will lift the company's future results.

Throughout much of last year, Clarcor struggled as the slowness of the economic recovery and concerns about future growth prospects in China weighed on the entire market for industrial equipment. The market for over-the-road trucks was particularly weak for Clarcor, and given the fact that those trucks represent about two thirds of its domestic aftermarket, the segment held back Clarcor's overall growth.

Clarcor has been cautiously optimistic about its 2013 prospects, but its guidance back in January came in below where analysts had pegged their estimates. That led to downgrades and cuts in estimates. With Chinese sales of heavy-duty engine filtration systems having fallen 10% during 2012, uncertainty about whether China will recover strongly will continue to weigh on the company.

Clarcor's brightest spot is almost certainly its energy-filtration segment, which has shown huge capacity for growth. With so much energy-production activity going on, the filters Clarcor makes have seen greater demand, with sales rising 7% in 2012 compared to the previous year. 3M's (MMM -1.60%) decision to buy Ceradyne was motivated in part by its expectations of growth in its ceramic filter sales to the energy industry. General Electric (GE -1.31%) has also incorporated energy-related filtration into its larger-scale push into energy services, complementing its air filtration systems. The presence of these giants shows just how much competition Clarcor faces in the space, but the growth prospects are worth the challenge.

In Clarcor's quarterly report, look for more information about the company's decision to invest $40 million in a new distribution center to support its aftermarket engine filter business. Although the facility won't be up and running until 2015, the decision indicates Clarcor's optimism about its future business.

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Fool contributor Dan Caplinger has no position in any stocks mentioned. You can follow him on Twitter @DanCaplinger. The Motley Fool recommends 3M. The Motley Fool owns shares of General Electric. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Stocks Mentioned

CLARCOR Inc. Stock Quote
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