GDI - Gardner Denver - Analysts Raise Estimates For the Second Quarter and the Year

Gardner Denver isn't seeing a global slowdown in the industrial sector, as the company saw orders increase 19% in the first quarter compared to 2007. Gardner Denver has surprised on estimates three out of the last four quarters on average of 13.12%. The company has a 2008 P/E of 12.82.

Full Analysis

Gardner Denver, Inc. (GDI), headquartered in Quincy, IL, is a global manufacturer of highly engineered reciprocating, rotary and vane compressors, liquid ring pumps and blowers for various industrial and transportation applications, pumps used in the petroleum and industrial markets, and other fluid transfer equipment serving chemical, petroleum, and food industries.

The company's products are sold in a variety of markets such as industrial movement, environmental processes, healthcare applications and energy production.

Gardner Denver has two business segments: Compressor and Vacuum Products and Fluid Transfer Products.

In the Compressor and Vacuum Products segment, GDI manufactures rotary screw, reciprocating, sliding vane and centrifugal compressors; positive displacement, centrifugal and side channel blowers; and liquid ring pumps and engineered systems for industrial and commercial use.

In the Fluid Transfer Products segment, the company manufactures various pumps, water jetting systems and related aftermarket parts used in oil and natural gas well drilling, and loading arms, swivel joints, couplers, valves, fall protection and access equipment used to load and unload ships, tank trucks and rail cars.

Gardner Denver Beats Wall Street Estimates for the First Quarter

On Apr 23, Gardner Denver announced first-quarter earnings and surprised on estimates by 18.75%, or 15 cents a share. Net income was $50.9 million, or 95 cents per share, 19% higher than the first-quarter in 2007. Analysts expected 80 cents a share.

Revenues increased 12% to $495.7 million. Orders increased 19% year-over-year. The company generated $65 million in cash during the quarter, compared to $37 million in the year ago period. It was the highest first-quarter level in the company's history. GDI used the extra cash to buy back $44.1 million in shares.

The company saw strong demand in the first quarter.

"Gardner Denver's strong performance in the first quarter of 2008 was the result of continued demand from nearly all of the industrial end market segments and geographies we serve," said Barry L. Pennypacker, Gardner Denver's President and Chief Executive Officer.

GDI Raises Guidance For 2008

The company is cautiously optimistic about 2008. It raised the guidance outlook for the full year to the range of $3.65 to $3.75 per share. GDI also forecast the second quarter earnings per share in the range of 88 cents to 92 cents a share.

"We continue to expect global economic growth to slow for the remainder of 2008, although demand in Europe and Asia may remain strong later into the year than previously expected. Compressor and Vacuum Products orders in the first quarter were outstanding, reflecting broad demand for standard products, OEM applications, and engineered products, which we expect to continue through the second quarter," said Mr. Pennypacker.

"In the second half of 2008, we anticipate that the rate of growth will slow. Given that Compressor and Vacuum Products backlog grew, compared to December 31, 2007, despite the continuing reduction in past due orders, we are slightly more optimistic in our outlook than in early February. We expect shipments to remain strong through the end of the third quarter and are cautiously optimistic for the fourth quarter of 2008," he said.

Analysts Raise Estimates For the Second Quarter and the Year

Given the strong quarter and the raised guidance estimates from the company, it's no surprise that all of the covering analysts raised estimates for both the quarter and the year within the last week.

Consensus estimates for the second quarter rose five cents to 91 cents from 86 cents a share. For the full year, consensus estimates rose by 39 cents to $3.74 from $3.35 per share, which is the high end of the company's guidance range.

Gardner Denver's 2008 P/E is 12.82, under the industry average of 14.45. Its price-to-book is 2.06, also under the industry average of 2.54. The company, a Zacks #1 Rank (Strong Buy), has an average five year return on equity (ROE) of 12.75%.

Content Courtesy: Zacks Investment Research

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