DOREL INDUSTRIES $39.73 - Toronto symbol DII.B

DOREL INDUSTRIES $39.73 (Toronto symbol DII.B; TSINetwork Rating: Extra Risk) (514-731-0000; www.dorel.com; Shares outstanding: 31.5 million; Market cap: $1.2 billion; Dividend yield: 3.0%) makes a wide range of products, including ready-to-assemble home and office furniture; juvenile products, such as car seats, strollers, high chairs, toddler beds and cribs; and recreational products, mainly bicycles.

In the three months ended December 30, 2012, Dorel’s sales rose 10.9%, to $622.6 million from $561.6 million a year earlier (all figures except share price and market cap in U.S. dollars). Excluding onetime items, earnings per share jumped 37.0%, to $0.63 from $0.46.

The home furnishing division’s revenue rose 7.5% on higher sales of imported furniture, mattresses and futons. The juvenile division’s revenue gained 11.6%, partly due to contributions from recent acquisitions, including Dorel Chile and distributors of children’s products in Colombia and Panama. Strong sales of new bicycle models helped push up the recreational/leisure division’s sales by 12.0%. Sales of the company’s premium Cannondale bicycles were particularly strong.

Excluding one-time items, Dorel’s earnings jumped 66.3%, to $27.1 million, or $0.85 a share, from $16.3 million, or $0.51, a year earlier. The latest figure beat the consensus estimate of $0.70 a share. The company did a good job of cutting its costs in the quarter, which boosted its profit margins.

Dorel has risen over 50% for us in the past year, but it still trades at a low 10.0 times its forecast 2013 earnings of $3.96 a share.

Dorel Industries is a buy.

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