Clarcor: High Multiple Despite No Organic Growth, Missed Targets
- Clarcor is trading at high multiple (23.55 times FY2013 EPS) despite of the fact that its top and bottom line have stagnated in the last 3 years.
- The company appears to be losing market share in its key end markets and its operating margins will be adversely affected by increased expenses in the near term.
- Clarcor has taken inorganic route to address lackluster organic growth but I am not too positive on its acquisition of low margin GE Air filtration business.
- The company’s guidance and sell side estimates are optimistic and Clarcor may miss its FY2014 guidance again like it missed FY2012 and FY2013 guidance.
- I see at least 18% downside going forward with its earnings on March 19th providing reality check to the investors.