Kewaunee Scientific Dividend Increase Pleases Investors

Kewaunee Scientific (KEQU) was added to the GeoBargain list on June 24, 2009, due to strong 2009 fourth quarter results ended April. On Wednesday, the Company reported its 2010 first quarter financial results, prompting the GeoTeam® to reconsider KEQU 's inclusion on the GeoBargain list. Top and bottom line growth were well below the minimum GeoBargain requirements.

1st QUARTER 2010 vs. 2009 FINANCIAL SNAPSHOT ENDED JULY

		1st Quarter 2010		1st Quarter 2009		Period Change
GAAP Revenue		$26.2 million		$25.4 million		3.0%
GAAP EPS		$0.42		$0.38		10.5%

Source: See Release, August 26, 2009

Select Valuation Items

• Price: $13.11 (8/26/09)
• Trailing P/E: 7.71
• PEG Ratio: 0.73
• Book Value Per Share: 11.49

The stock still reacted positively to Wednesday morning's financial news, possibly a reaction to the company also announcing a 25% increase in its quarterly dividend. This action could signify that better earnings per share growth is in the cards for the remainder of the year. There are also positive overtones in the fact that over the last three years Kewaunee Scientific 's second quarter has been sequentially higher than its first quarter.

Still, it doesn't appear that KEQU will be able to achieve the GeoBargain required growth traits for 2009. Notwithstanding this shortcoming, the stock is still selling at a P/E of 7.71 and a PEG ratio under 1 which may attract value investors. Accordingly, we are reclassifying KEQU as a GeoSpecial. If the stock can attain a modest P/E of 10, matching its 2009 first quarter EPS growth rate, then it could reach $17.70.

Disclosure: Long KEQU