March 15, 2010 - Lubrizol Corp. (LZ-NYSE) a specialty chemical company, produces and supplies technologies that improve the performance of its customer's products in the transportation, industrial, and consumer markets worldwide. The company operates in two segments, Lubrizol Additives and Lubrizol Advanced Materials.

The Lubrizol Advanced Materials segment offers a portfolio of performance chemicals used in consumer and industrial applications, such as ingredients for personal care and pharmaceutical products; emulsions and additives for coatings and inks; and specialty plastics and materials. This segment offers three primary product lines, which include Noveon consumer specialties, performance coatings, and engineered polymers. Noveon consumer specialties products include acrylic thickeners, film formers, fixatives, emollients, silicones, specialty surfactants, methyl glucoside, lanolin derivatives, and cassia hydrocolloids.

Performance coatings product line offers high-performance polymers and additives for specialty paper, graphic arts, paints, textiles, and coatings applications. Engineered polymers product line consists of Estane thermoplastic polyurethane and TempRite engineered polymers used in the construction, automotive, telecommunications, electronics, and recreation industries. The Lubrizol Corporation was founded in 1928 and is headquartered in Wickliffe, Ohio.

Here's the most interesting part about LZ: earnings skyrocketed in 2009, going from $4.09 to $7.55. This year consensus estimate for earnings by 8 analysts is $7.88 (with a range of $7.50 to $8.25), then $7.97 next year (with a range of $6.50 to $9.00....so much for a consensus of opinion). Next quarterly earnings will be out on April 29. Look for $1.82, well above the $1.06 of last year's first quarter. In the December quarter, earnings were $1.95, 10.2% above analysts' estimate, and way ahead of 2008's final quarter of $ .74.

The company has shown amazing resilience to a tough global economic slowdown, especially in the construction business. It expanded its market share in developed countries and made good inroads in emerging economies. Analysts expect more growth in 2010 and 2011 as a global recovery accelerates. Even if economies stabilize, expect to see solid growth in revenues and earnings as the company has shown positive improvement in both during a challenging time.

With higher demand, LZ is expanding, especially in South China where it's building a new plant, the centerpiece of its growth. Also on the drawing board are smaller plants in Europe and the U.S.

There's almost a $1 billion in the bank (actually $991 million but a billion sounds better). With all that cash, look for the company to buy back stock (the board just approved resumption of its stock repurchase program). Of course, it can also buy other companies, and analysts think an acquisiton or two may happen this year or next. Increasing the dividend is another option.

More numbers: Market Cap is $6.00 billion. Forward P/E is 10.97. Price to book is 2.81. Book value is $31.05. Operating margin for the last 12 months was 18.38% while Profit margin was 10.92%. Return on equity was a remarkable 27.42% while Return on assets was 11.81%. Total revenues for the last 12 months was $4.59 billion. Cash per share is $14.45. Current ratio is 3.68. Total debt is $1.39 billion which is about 39% of capital. Beta is a relatively high 1.59. 52-week low was March 12 of last year at $27.74. The high was at $87.99 on March 8 of this year. There are 68.60 million shares outstanding with a Float of 68.11 million shares. Insiders own .36% of the stock while Institutions have 88.70%. There is an annual dividend of $1.24 which gives a yield of 1.4%.

This is a solid stock that investors love. While it was smacked hard last March along with the whole market, the stock bounced back strongly and hasn't taken a breather in a year. If earnings for the first quarter exceed expectations again as they did in the last quarter of 2009, expect more upward push on this one. This is a company that has delivered exceptional earnings in a very tough time. And it looks like it might continue.

- Company Web site: www.lubrizol.com

- Ted Allrich