H.B. Fuller Company (FUL) has surprised on estimates the last two quarters by an average of 38.67% as volumes have improved quarter over quarter. The company is trading with a forward P/E of 14.98.

Company Description

H.B. Fuller manufactures adhesives, sealants, paints and other specialty chemical products for customers in more than 100 countries. The company operates in four geographic regions: North America, Latin America, Europe and Asia Pacific. It has employees in 36 countries.

H.B. Fuller Surprised on the Third Quarter by 33.33%

On Sep 22, H.B. Fuller reported third-quarter results and easily beat the Zacks Consensus Estimate by 12 cents per share. Earnings per share were 48 cents compared to 44 cents in the year ago quarter. This surpassed the Zacks Consensus Estimate of 36 cents per share.

Revenues, however, fell 12.9% to $315.3 million from the third quarter of 2008 as weak end-market demand continued. The good news was that this was less of a decline than in the second quarter, when revenues fell 15.1% year over year.

Lower volumes and unfavorable foreign currency translation hurt growth but the company was able to sustain a higher average sales price. Acquisitions also impacted revenues positively in the quarter.

On a quarter over quarter basis, the company saw improvement. Revenues rose 5% on improved volumes and slightly lower raw material costs in the third quarter compared to the second.

Outlook

The company expects revenues to continue the quarter over quarter improvement that was seen in the second to third quarters. It expects net revenue to be $330 million in the quarter.

Analysts Are Bullish on 2009

The Zacks Consensus Estimates for the fourth quarter and the full year jumped after the better-than-expected third quarter report. Fourth-quarter estimates rose 5 cents to 41 cents over the last 30 days with 5 out of 6 covering analysts raising during that time.

The 2009 Zacks Consensus Estimate jumped 11.6% to $1.35 from $1.21 per share in the last month.

Value Fundamentals

H.B. Fuller is a Zacks #1 Rank (strong buy) stock. It is trading with a price-to-book of 1.54. The company has a strong 5-year average return on equity (ROE) of 11.12%.

As an added bonus, H.B. Fuller also pays a dividend, with a current yield of 1.40%.

Zacks Investment Research
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