Shares of Pentair Ltd. (PNR) reached a new 52-week high of $58.59 on Tuesday, May 21, 2013. The new high was primarily driven by the company’s ability to consistently raise dividends and expected benefits from integration and standardization synergies. In addition, the company reported improved results for the first quarter of fiscal 2013.
Pentair has delivered a robust one-year return of about 41.62% and decent year-to-date return of about 17.11%, outperforming the S&P 500. Average volume of shares traded over the last three months was approximately 1.3 million.
This provider of products, services, and solutions for water and other fluids, thermal management and equipment protection has been delivering positive earnings surprises over the past four quarters with an average surprise of 3.93%. This Zacks Rank #3 (Hold) stock has a market cap of $11.7 billion and a long-term expected earnings growth rate of 16.7%.
Pentair will benefit from a North American residential recovery and strong global energy markets, which collectively account for half of Pentair’s revenues. Synergies driven by repositioning actions and functional standardization efforts are on track to deliver $100 million for the full year of 2013.
Pentair recently increased its dividend by 2 cents or 9% to 25 cents per share. This marks the 37th consecutive year of increasing its dividend. The increased dividend will yield 1.8% at current prices.
Strong 1Q13 Earnings, Improved Outlook
Pentair’s first-quarter 2013 earnings per share of 58 cents signaled a 7% increase year-over-year and up 3% from the Zacks Consensus Estimate of 56 cents. Pricing and productivity, reflecting the success of the Pentair Integrated Management System, as well as benefits of integration and standardization synergies led to the improvement.
For 2013, Pentair projects adjusted earnings per share to lie between $3.10 and $3.30, reflecting an annual growth of 22 to 30% over earnings per share of $2.54 in 2012 on the back of sales of around $7.6 billion. The company expects to generate free cash flow in excess of 100% of net income. The Zacks Consensus Estimate for 2013 is currently at $3.23 per share, reflecting a 35% year over year growth and within the company’s guidance.
Other Stocks to Consider
Other stocks in the industrial products sector that are currently performing well and have a good visibility include AO Smith Corp. (AOS), Graco Inc. (GGG) and Tri-Tech Holding, Inc. (TRIT) with a Zacks Rank #1 (Strong Buy).
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