Perrigo Company (PRGO) has surprised on estimates the last two quarters as it reported record sales for fiscal 2009. PRGO has a PEG ratio of just 0.94.

Company Description

Perrigo manufactures over-the-counter and prescription pharmaceuticals, nutritional products and other consumer products. It also provides over-the-counter (OTC) products for various stores under those store brand names. For instance, it manufactures an acetaminophen product similar to the Tylenol brand.

Record Sales in 2009

On Aug 18, Perrigo reported fiscal fourth-quarter and full year 2009 results and saw record sales and earnings for the year. It was the first year the company reported $2 billion in sales, which was a 16% rise from 2008. It was also the second year in a row of record sales. The increase was driven by new product sales.

For the fourth-quarter sales grew by 7.1% to $508.2 million from $474.2 million in the fourth quarter of 2008. The best performing sectors were the Consumer Healthcare segment, which rose by 23%, and the Rx Pharmaceutical segment, which climbed 27% year over year.

Earnings per share for the fourth quarter jumped 13.6% to 50 cents from 44 cents in the year ago period. This also beat the Zacks Consensus Estimate of 46 cents by 8.70%.

Growth Expected to Continue in Fiscal 2010

Perrigo is bullish about fiscal 2010, forecasting year over year earnings per share growth between 7% and 13%. It expects earnings per share of $2.00 to $2.12.

Analysts expect earnings growth of 12.19% over fiscal 2009. The 2010 Zacks Consensus Estimate has risen in the last month to $2.10 from $2.05, which is at the higher end of the company’s guidance range. 6 out of 10 covering analysts raised in that time period.

Perrigo is expected to report first quarter 2010 earnings on Nov 5.

Income

Shareholders are currently being rewarded with a dividend yielding 0.60%. This is well above the industry average, which is, actually zero.

Fundamentals

Perrigo is a Zacks #1 Rank (strong buy) stock. It has a forward P/E of 17.18. The company also has a stellar 1-year return on equity of 20.19%.

Zacks Investment Research
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