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Myers Industries Inc. (MYE - Snapshot Report) reported year-over-year earnings growth of more than 40% in its third quarter, which, along with an acquisition, helped this polymer products manufacturer become a Zacks #2 Rank (Buy). Moreover, MYE offers a decent dividend yield of 2.2% and expects to deliver double-digit earnings growth in 2012 and beyond.

Optimistic Third Quarter

On October 18, Myers Industries reported a 42.9% rise in third quarter earnings per share to 20 cents, compared to 14 cents a year ago. The result was in line with the Zacks Consensus Estimate.

Revenues in the quarter grew 3.7% to $197.3 million driven by sales increases in the Engineered Products (21.6%) and Material Handling (5.7%) segments, which more than offset the sales decline in the Distribution segment. Gross margin increased 1.6 percentage points to 26.7%, due to lower manufacturing costs and higher productivity during the quarter.

Management expects continued improvement in its businesses in the fourth quarter and full year. It acknowledged the acquisition of Brazil-based Plasticos Novel in July for growth in its Material Handling segment. Furthermore, the company expects that the acquisition of Illinois-based Jamco Products Inc. will be a key growth driver for its Material Handling business.

Earnings Estimates Inching Higher

The Zacks Consensus Estimate for 2012 went up 1.1% to 95 cents per share in the past 30 days, suggesting year-over-year growth of 41.4%. For 2013, the Zacks Consensus Estimate rose nearly 1% in the same time to $1.10, reflecting year-over-year growth of 15.8%.

Consistently Higher Dividends

Since June 1, 1992, Myers Industries has been consistently paying dividends with a raise every year except in 2009, reflecting an efficient management policy and sound financial position. The company last raised its quarterly dividend on March 5 by 14.3% to 8 cents, representing a payout ratio of 37.2%. The dividend growth is also higher than the year-ago level of 7.7%.

Valuation is Expensive but Reasonable

Myers Industries is currently trading at a forward P/E of 15.7x, which is on par with the peer group average. However, the company's price-to-book of 2.2x and price-to-sales of 0.6x are at a premium compared with the peer group averages of 1.1x and 0.3x, respectively. On the positive side, the company has a 1-year ROE of 13.3%, which is considerably higher than its peer group average of 5.1%.

Myers Industries produces a diverse range of polymer products for industrial, agricultural, automotive, commercial and consumer markets. The $500.3 million company grew from a small storefront distributing tire service supplier to an international manufacturing and distribution enterprise. As of March 1, 2012, Myers operated 16 manufacturing facilities, 24 sales offices, 4 distribution centers and 6 distribution branches located in North America, Central America and South America.

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Source: Myers Industries: Growth And Income