Company Spotlight - Mettler-Toledo |  - Co. Spotlights available via RSS feed
| On Balance, Very Good |  
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| | MTD | $96.00 | The Good: Growing demand globally for products.
The Bad: Valuations are a little high, costs are increasing.
The Beautiful: Check out the Return on Equity. | P/E | 24 | | PSR | 2.4 | | ROE | 31% | | Debt/Eq. | 0.66 | | Div.Yield | 0% |
March 6, 2008 - Mettler-Toledo International, Inc. (MTD-NYSE) likes to weigh things carefully. The company makes computerized scales, analytical balances, and other weighing instruments. Mettler-Toledo's other scientific equipment includes pH meters, thermal and moisture measurement systems, drug purification equipment, and metal detection systems used to maintain product quality, increase yields, and comply with industry regulations. The company makes products for the retail grocery industry, including labeling systems, checkout scanner scales, receiving scales, and data management software. Mettler-Toledo also offers services, such as calibration, certification, regulatory compliance, repairs, and spare parts supply.
Along with making scales and measurement instruments, MTD makes money. In 2007, earnings were $4.74 a share, up from $3.63 in 2006. This year analysts expect eps to finish at $5.40 and $6.10 in 2009. Sales are jumping as well, having gone form $1.595 billion in 2006 to $1.793 billion in 2007. Look for $1.915 billion this year and $2.030 billion in 2009. Analysts predict sales will increase by 15.5% per year, on average, over the next 5 years while earnings will improve by 17.5% a year, on average.
In the last quarter of 2007, the company saw sales up by 15% compared to the same quarter in 2006 which included a most favorable currency benefit (7% of the improvement). Revenues improved by 7% in Europe, 20% in Asia and other parts of the world, and moved ahead by 4% in the Americas. Europe and the Americas saw increased demand for lab instruments and product inspection goods. Because of fixed operating costs, profit margins widened with increased volume even with the cost of steel, a key raw material for instruments, being higher.
Some positive indicators that things will only get better for MTD: Lab and product inspection products should see ever increasing demand this next year. New product introductions in balances and analytic instruments should be well received. Worries about food safety will no doubt increase inspection sales.
It's not all positive. If the economy slows too much, it will hurt profit growth, especially in the industrial business divisions. Raw materials and costs in general will no doubt rise this next year. While the company in the past has been able to increase prices to compensate for these, there's no assurance further price hikes will stick.
Ever growing demand is coming from emerging market countries, ones like China, the largest, Russia, India, Southeast Asia, and Eastern Europe. They now account for about 25% of sales. Look for higher percentages as these countries require more inspection and lab tools.
Some numbers: Market cap is $3.7 billion with 36 million shares outstanding. Current assets are 1.5 time current liabilities. Debt is 40% of capital. Net profit margin was 10% in 2007 with analysts looking for 10.4% this year and 11.1% next year. There is no dividend. Return on Equity is an eye popping 31% with expectations of similar numbers for this year and next. P/E ratio is 24.
With this stock off about 20% from its highs, it's a good one to analyze. Most of the numbers are strong, and ROE is excellent. For the last 6 years, the stock has gone steadily higher, starting at $24.80 in 2002. It's taking a breather right now. If the economy doesn't go completely down the drain, this stock should show continued success.
- Company Web site: www.mettlertoledo.com - Ted Allrich |
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