This week’s Stock of the Week is an old company that’s learning how to sell its many products in new ways.
Acme United Corporation (ACU), whose varied products range from scissors and pencil sharpeners to fishing knives and first-aid kits, is making a big push into online sales. That push, especially through Amazon.com, should result in 100% growth in online sales when numbers are reported for last year. But it also means that the company had to alter existing fulfillment systems, management of its warehouse and the ordering process to better accommodate online sales—temporarily depressing earnings and likely holding back the stock. The initiatives are now taking hold and will position the company better for the changing retail marketplace. Meanwhile, it has announced $8 million in new committed business for traditional brick-and-mortar retailers.
The company has been in business since 1867 and has grown through many acquisitions through the years. Its products include scissors, rulers, pencil sharpeners, paper trimmers and other products for school, home, office, hardware and other markets. It sells an extensive line of fixed-blade and folding knives, tactical knives and more thanks to its acquisition, at very low cost, of Camillus Cutlery in 2007. Acme also makes fishing tools and knives, sharpening tools, first-aid kits and safety products, emergency medical kits and over-the-counter medicines such as acetaminophen and ibuprofen. It also makes some specialized products. An important one, Spill Magic, is widely used by many retailers and restaurants for fast and easy cleanup when customers get sick.
Revenue was $125 million in 2016 and will likely be $133 million for 2017 and $142 million this year. The dividend of $0.44/share recently yielded 1.8% and appears secure.
Fiscal year: December. Earnings per share: 2018 est./$1.64…2017 est./$1.48…2016/$1.64.
Scott W. Hood, CFA, is CEO and portfolio manager at First Wilshire Securities Management, Pasadena, California, which manages $410 million. FirstWilshire.com