QUAKER CHEMICAL CORP. $72 (New York symbol KWR; Income Portfolio, Manufacturing & Industry sector; Shares outstanding: 13.2 million; Market cap: $950.4 million; Price-to-sales ratio: 1.3; Dividend yield: 1.4%; TSINetwork Rating: Average; www.quakerchem.com) makes lubricants and chemicals that keep mechanical parts from rusting.
Quaker continues to benefit from recent acquisitions that have expanded its international operations: it now gets 60% of its sales from overseas. The company has also cut its costs and raised its prices, which has improved its profitability.
In the three months ended June 30, 2013, earnings jumped 43.5%, to $1.22 a share from $0.85 a year earlier. Without several unusual items, including a tax refund and charges related to a client’s bankruptcy, per-share earnings rose 11.1%, to $1.00 from $0.90.
Sales gained 4.6%, to $184.8 million from $176.8 million. Contracts from new steel mills in China and India pushed up Asian sales by 15%, while European sales gained 10%, mainly due to the contribution from a recent acquisition. Sales fell 4% in South America on weaker demand from carmakers and steel producers. North American sales fell 3%.
The stock is up 49% in the past year and now trades at 18.0 times Quaker’s likely 2013 earnings of $4.00 a share. However, rising costs for oil, which Quaker needs to make its products, could slow its earnings growth.
Quaker Chemical is a hold.
