Dividend Stock Analysis

Acme United Dividend Stock Analysis

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Acme United Corporation (AMEX: ACU) is a supplier of cutting, measuring and safety products to the school, home, office, hardware and industrial markets.  Incorporated in 1882, Acme has operations in the United States, Canada, Europe, Hong Kong and China.

Acme sells it’s products under 4 main brands: Westcott, Clauss, Camillus, and Physicians Care.

The following chart shows the breakdown of revenue by region.  As of 2009, 76% of sales came from the US and Asia.

The next chart shows growth in EPS, Dividends, and Free Cash Flow Per Share.  ACU paid it’s first dividend in 2004 and has increased it’s payout every year since by an average of 16.12%.  While EPS showed strong growth, especially if we discount 2009, free cash flow has been erratic.  There were also two years, in 2005 and 2006, that had negative FCF.

Payout ratios in 2009, both eps and cash based, were below 30%

ACU has a strong current ratio of 5.26, and debt has shown some inconsistency over the years, but currently sits at a very reasonable 27.17% of total capital employed.

Return on Equity has ranged from under 10% to over 25%, and in 2009 was 11.98%.  Cash Return on total capital has shown similar inconsistencies, ranging from under 1% to over 20%.  The most recent cash return for 2009 was 17.85%.

The current stock price of 9.65 has a trailing p/e of 11.35 and a forward p/e of 10.97.  Using the 2009 dividend, ACU yields 2.07%.  The expected 2010 dividend of 0.21 the yield is 2.17%.

ACU is trading above it’s 5 year average high yield of 1.97%, and near it’s 5 year average low p/e of 10.16.

I don’t currently plan on initiating a position in ACU.  At the very least I’ll wait until I see a longer history of increasing dividends.  After that time, I’ll re-evaluate.

Full Disclosure:  I do not own any ACU

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I'm a dividend growth investor who is aiming to retire early in 5 years at the age of 45. My goal is to live off the income my dividend portfolio and rental property produce exclusively and leave the corporate rat race. I hope you will join me in this journey!