W. R. Grace & Co. (GRA): Zacks Rank Buy


W. R. Grace & Co. (NYSE:GRA - News) analysts are getting more bullish by the day. With the company's recent earnings surprise, acquisition and revised guidance it is easy to see why.

Company Description

Grace supplies catalysts and other products for petroleum refiners to make plastics, silica-based materials and other industrial applications. Uses range form good and beverage packaging to building materials.

Earnings Beat Expectations

On Jul 26 W. R. Grace reported second quarter results that gave investors plenty to be happy about. Revenues were up 21%, to $826 million due to both higher volumes and pricing.

Net income surged 46% to $133 million. That works out to $1.11 per share, and impressive 22 cents higher than the Zacks Consensus Estimate.

Raising the Forecast

In the same press release W. R. Grace also raised its full year guidance. Full year sales are expected to be between $3.25 and $3.3 billion, up from $2.85 to $2.95 billion.

The earnings beat coupled with optimistic guidance left analysts with not choice but to raise their estimates as well. Analysts polled by Zacks are now expecting $3.71 per share this year, up from $3.34. Next year's consensus is $3.86, up from $3.50.

Full-year growth rates are now 41% and 4%, respectively.

Priced to Move

Shares of GRA are going for about 14 times forward estimates, putting the PEG around 1.4 times. The price to sales is coming in at 1.3 times.

M&A Activity

W. R. Grace bought a Belgian waterproofing company as part of its ongoing growth strategy. Financial details were not disclosed.

As the company continued to grow both organically and through acquisitions, the outlook just keeps getting better. Take a look at the long-term earnings trend below. Each colored line is a full-yea consensus estimate.

You can see solid year over year growth as well as good upward movement throughout the year.

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W. R. Grace & Co.. ticker GRA  >

Bill Wilton is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Small Cap Trader service

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