Two Guru stocks with Soaring Reported Profits
Carefusion Corporation, the medical devices company, reported on Monday that profits for the year ended June 2011 increased 84.2% to $291 million as the company experienced growth in its Infusion, Dispensing and Infection Prevention businesses, gross margin expansion and the benefit of strong spending controls.
Revenue for fiscal 2011 increased 2 percent to $3.53 billion. Operating income increased to $496 million and income from continuing operations increased to $291 million, or $1.29 per diluted share. Excluding nonrecurring items, adjusted operating income increased $87 million to $602 million and adjusted income from continuing operations increased $70 million to $371 million, or $1.65 per diluted share.
Kieran Gallahue, chairman and CEO said, "Looking ahead to fiscal 2012, we will continue to leverage operational efficiencies and reduce complexity across our businesses to drive bottom line growth that outpaces our top line growth. We are expecting revenue growth in a range of 3 to 5 percent over fiscal 2011 results, representing an improvement over the 2 percent growth we had this year and acceleration over the low single digit growth rates we are seeing in the markets where we participate. For adjusted EPS we are guiding to a range of $1.80 to $1.90."
The stock price rose 9.97% on Tuesday to $24.48 representing a forward P/E ratio of 13.2.
LSB profits soar 350%
LSB Industries, the chemical and climate control company, reported on Monday an increase in profits for the second quarter 2011 to $28.6 million from $6 million in 2010. The increase was driven by a $33.5 million net increase by the Chemical Business and a $2.2 million increase by the Climate Control Business. The increase in the Chemical Business operating income reflects increased overall selling prices and volumes across all major product lines: agricultural, mining and industrial chemical products. Gross profit improved due to reduced costs per ton stemming from improved production efficiencies and higher volumes at the Pryor, Okla., chemical plant.
Jack Golsen, LSB's board chairman and CEO stated, “This was the best quarter in our recent history in terms of sales, operating income and net income. While we remain confident that 2011 will be an outstanding year, our optimism has been tempered by current economic and weather-related issues.
“In our Chemical Business, we expect that demand for our industrial and mining products should remain strong for the balance of 2011. The supply and demand fundamentals for our agricultural products have never been better. Demand for UAN fertilizer is robust, driven by the positive outlook for the crops that use our nitrogen fertilizers. Currently certain of our El Dorado Chemical Company facility’s Mid-South market area for agricultural grade ammonium nitrate is in a drought condition. As a result, we expect to ship product to other freight logical markets and/or divert the capacity to other products.”
About the author: ABN focuses on the earnings results of small cap companies, companies trading on lower P/E or P/BV ratios and companies with above average earnings or sustained growth. To visit ABN’s website click here.
Disclosure: The author has no long or short positions in Carefusion or LSB Industries.
Forward-Looking Statements: Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially.