K-Tron International, Inc. (NASD: KTII) bills itself as "The
world's #1 feeder company". K-Tron serves the bulk solids material handling
market through three business or product lines: the feeding equipment (the
“K-Tron Feeder Group”), pneumatic conveying equipment (the “pneumatic conveying
group”) and size reduction equipment (the “size reduction group”). K-Tron's
material handling equipment is used in a wide variety of manufacturing and
other industrial processes, particularly in the plastics, food, chemical,
detergent, pharmaceutical, electric utility and pulp and paper industries. The
company designs, engineers, produces, markets and services this equipment, and
are sold both on a standalone basis or as part of a larger system that the
company may design and sell. K-Tron has manufacturing facilities in the
United States, Switzerland, the United Kingdom and Canada, and its equipment is
sold and supported throughout the world.
The Stock's price gained
29.7% over the past 3 months; 44.9% over the past 6
months; and 81.9% over the past 12 months.
K-Tron is classified as a small-cap value company.
The Company's market capitalization: $154.11 million. The Stock is rated to
significantly outperform the market over the next six months. The Company
was formed in 1964.
K-Tron's corporate
headquarters are located in Pitman, New Jersey. Approximately 460 people are
employed by
K-Tron.
Sector: Technology; Industry: Scientific & Technical
Instruments; Ticker: KTII; Exch:
NASD;
09/15/06 Closing Price:
$59.00)
STOCK GRADE (ASG): 46.25 (GOOD!)
BUSINESS & FINANCIAL SUMMARY
(Yahoo)
EXPANDED BUSINESS DESCRIPTION
(Reuters)
STOCK INFO/RESEARCH
(MSN)
OWNERSHIP
(MSN)
KEY DEVELOPMENTS
(MSN),
RECENT NEWS
(MSN) &
HEADLINES (Yahoo)
HISTORICAL PRICES (Yahoo)
&
PRICE CHART
(IQChart)
COMPANY'S WEB SITE
STOCK'S CORE
STRENGTHS (SEE: Table Below)
| Management's Effectiveness (12 Mo.) | . . . | Return on Equity: | 18.56% |
| Profitability (12 Mo.) | . . . | Profit Margin: | 7.28% |
| Stock's Growth Record (12 Mo.) | . . . | Revenue: | 5.73% |
| . . . | EPS: | 5.87% | |
| . . . | Price: | 71.68% | |
| . . . | Dividend: | NA | |
| PE & EPS (12 Mo.) | . . . | Price/Earnings: | 17.44 |
| . . . | Earnings/Share: | 3.40 | |
| Price / Share (Closing) | . . . | 09/15/2006: | $59.00 |
K-TRON'S INTERNATIONAL, INC. -
EVALUATION
K-Tron's
stock emerged as an ACE'S selection based on the evaluation results of the
criteria listed below. The evaluation results are encapsulated as one value in
ASG (short for ACE'S Stock Grade). ASG
is a proprietary variable that was devised by ACE'S to measure the
quality of a stock for investment. K-Tron's ASG value of 46.25 is
GOOD.
A. MANAGEMENTS EFFECTIVENESS - GOOD
B. PRODUCTS & SERVICES, SET OF - GOOD
C. SALES - VERY GOOD
D. CASH FLOW, FREE -
EXCELLENT
E. PROFITABILITY - EXCELLENT
F. PRICE-EARNINGS RATIO (P/E) - GOOD
G.
FINANCIAL HEALTH -
GOOD
H.
MARKET CAPITALIZATION -
EXCELLENT
I.
TRADED VOLUME -
POOR
J.
PRICE GROWTH - EXCELLENT
A. MANAGEMENTS EFFECTIVENESS - GOOD
How well a company performs
generally - in its
business operations, controlling costs, the success of its products and
services in the market place, profitability, and the like - depends on its
management's efficiency. Return on Equity ( ROE) is used by ACE'S as a general indication
of the company's efficiency.
K-Tron's ROE (ttm) of 18.2% is higher (by 19.74%) than the Industry's ROE of
15.2%; and lower (by 18.75%) than the S&P 500's ROE of 22.4%.
(Ref.:
MSN Finance\Key Ratios).
ACE'S gives a preferential rating to a company that has a
comparable or relatively higher ROE than the Industry. ACE'S rating of
K-Tron's Management's Effectiveness: GOOD (HIGHER THAN INDUSTRY'S AVERAGE).
^ Back to Evaluation
B. PRODUCTS & SERVICES -
GOOD
Products and services are the elements that enables a company to have a presence
in its target market and generate sales. The set of products and services that a company has and how successful those products and services performs in the
target market are very important factors in considering a company's stock for
investment.
K-Tron's :core businesses products: Feeding Equipment; Pneumatic Conveying and
Ancillary Equipment; Size Reduction Equipment; and K-Tron Electronics.
K-Tron's Feeder Group, consisting of several K-Tron companies operating in the
United States, Europe and Asia,
produces feeders that control the flow of materials into a manufacturing process. The manufacturing process then
transforms these materials into an end
product. K-Tron's feeders are used in many different industries worldwide,
including the plastics compounding, food, chemical, detergent and pharmaceutical
industries.
This Group markets conventional single and twin screw feeders, belt feeders and
vibratory feeders, which are offered in different designs, sizes and finishes to
meet the requirements of a given material handling application and to assure
compliance with applicable industry codes and specifications. In addition, these
feeders are available in both a volumetric mode, where the flow of material is
controlled by volume, and a gravimetric mode, where the flow of material is
controlled either by weight or loss of weight over a defined time period.
Gravimetric feeders, which represent the majority of K-Tron's feeding equipment
sales, are typically used in premium applications where short-term accuracy in
feeding the raw materials is essential to produce a high-quality end product.
This Group also recently introduced a new type of feeder, the BSP or Bulk Solids
Pump, that is based on a patented technology which have been licensed on a
worldwide exclusive basis in the fields of use relevant for K-Tron's feeder
business. The BSP feeder does not utilize the usual screws, belts or vibratory
trays to convey material but instead relies upon positive displacement action to
feed accurately free-flowing materials, offering uniform discharge, consistent
volume and gentle handling.
PNEUMATIC CONVEYING &
ANCILLARY EQUIPMENT
The pneumatic conveying group, which consists of two companies in the United
Kingdom and one in Canada, integrates
two brands, Colormax and PCS, together with the manufacturing of the Hurricane
product line for the K-Tron Feeder Group into one business unit. The Colormax
brand is used for pneumatic conveying equipment and material handling systems
sold to customers in the plastics injection molding industry. The Colormax
product line includes self-contained and central vacuum systems, dryers,
volumetric and gravimetric blenders, material storage bins and feeders for
handling various resin materials in the molding or extrusion of consumer plastic
products.
The PCS brand is used for pneumatic conveying equipment and
material handling systems sold to the food, pharmaceutical, plastics and
chemical industries. PCS products include standard vacuum conveyors for hard-to-handle
materials, an all stainless steel
pharmaceutical line of equipment and a variety of ancillary equipment. PCS also
has expertise in conveying fragile products
without degradation and in designing dense phase vacuum conveying systems for
the transport of products without segregation.
SIZE
REDUCTION EQUIPMENT
Size reduction equipment are used to resize various materials to a given smaller
size. K-Tron's size reduction group are comprised of the U.S.-based Penn Crusher
and Jeffrey businesses. The principal industries served by this group are the
electric utility, mining, pulp and paper, and wood and forest products
industries. The Penn Crusher business manufactures size reduction and related
equipment for the electric utility industry to crush coal before it is used as
fuel in the steam furnaces of power generation plants, and it also serves other
industries such as mining, quarrying and glass making. Penn Crusher sells its
equipment and services worldwide through more than 50 independent sales
representatives, with a focus on the United States market and with a growing
presence in China.
The crushers most commonly sold by Penn Crusher are hammermills, in which the
material is broken by impact from
hammers and then scrubbed against a screen for desired size. Penn Crusher
manufactures a number of different
hammermill designs, such as granulators, that use rows of ring hammers to crush
with a slow, positive rolling action, and
Bradford breakers, in which the material is crushed by gravity impact only.
Crushers come in a wide variety of sizes and
configurations, and each machine is built-to-order to meet customer
specifications. A significant portion of Penn Crusher's revenues is derived from
replacement part sales.
The Jeffrey Equipment business produces wood hogs, other size reduction
equipment and related items for use primarily in
the pulp and paper and wood and forest products industries. Jeffrey hammermills
are also sold to the mining industry to
resize chunks of coal, which come directly out of the mine, into smaller pieces.
Jeffrey markets its equipment through a
combination of independent sales representatives and distributors, with a focus
on the United States market.
The Jeffrey brand encompasses a number of basic crusher designs that are
available in varying sizes and configurations
to meet specific customer needs. Wood and bark hogs are used in the pulp and
paper and wood and forest products
industries to produce mulch, boiler fuel, chips for composite wood products and
compost. Jeffrey also sells a chip sizer that
is marketed to the pulp and paper industry to resize chips too large for use in
a pulp digester and another crusher that is
marketed to the mining industry to reduce coal chunks from the mine-mouth for
further processing.
Jeffrey also sells a line of electromechanical and electromagnetic vibratory
feeders that are used primarily in the
aggregates, coal, mineral, chemical and other industries to feed bulk solid
materials into processes. Applications range from
reclaiming aggregates from stockpiles to feeding coal in a potentially explosive
environment. A significant portion of Jeffrey’s revenues is derived from
replacement part sales.
K-TRON
ELECTRONICS
K-Tron Electronics designs, produces and tests electronic assemblies, for
internal and also to sell to third parties, generally focusing on small
production runs for customers in New Jersey, eastern Pennsylvania and Delaware.
The regional market for electronic assemblies is large, and K-Tron Electronics
is one of many suppliers to this market.
ACE'S
gives a preferential rating to a company who have
a variety of product
and services that have present and continued utility in a broad and
dynamic market.
An estimation of the latter products' utility, distinctive qualities and competitiveness would be subjective assessments.
However, there is one objective data that indicates how well the subjective
elements of K-Tron's products and services
are assessed and used by its target market - the company's
sales.
ACE'S rating of
K-Tron's line-up of Products & Services: GOOD
^ Back to Evaluation
C. SALES - VERY GOOD
Sales is an important indicator on how a company's products and services
performs in its target market. Generally, a high sales figure is preferred than a lower figure.
Also, a steady and appreciable growth in a company's total sales from one year to the next is a key indicator on how a
company is able (or unable) to sustain and improve the utility of its products and services in the marketplace.
K-Tron's annual revenue was $71.82M in 12/2001, $68.23M in 12/2002, $94.68M in 12/2003,
$112.49M in 12/2004 and $118.94M in 12/2005. Relative to 12/2001's revenue, the
Company's sales decreased 5.00%% in 2002; increased 31.83% in2003; 56.63% in 2004 and
65.61% in 2005,
(Ref.:
MSN Money\Financials).
K-Tron's ttm annual sales of $129.0M was 637.14% higher than the Industry's
sales of $17.5M.
K-Tron's ttm Sales growth rate of 17.20% was 3.90% points lower than the
Industry's rate of 21.10%.
(Ref.:
MSN Money\Research).
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a high and progressively increasing level of sales from year-to-year. K-Tron's
year-to-year annual revenues have progressively increased
from 2002 to 2005. ACE'S rating of
K-Tron's Sales Growth Rate: VERY GOOD.
^ Back to Evaluation
D. CASH FLOW, FREE -
EXCELLENT
Cash flow is crucial to the operation and survival of companies. A company
having ample ready cash ensures that creditors, employees, and others can be
paid on time.
Cash flow could be considered as a better measure of a business's profitability
than earnings, because a company can show positive net earnings and have insufficient cash flow (that is, the company
is not able to pay its debts). Cash Flow
thus can be used as an indicator of a company's financial strength.
K-Tron's cash flow during the past 5 years: $5.25M in 12/2001;
$9.95M in 12/2002; $9.36M in 12/2003; $12.55M in 12/2004; and $10.51M in
12/2005. Relative to 12/2001, the Company's cash flow increased 8.95% in
2002, 7.83% in2003, 139.05% in 2004, and 100.19% in 2005.
(Ref.:
MSN Money\Financials).
ACE'S
gives a preferential rating to a company that have demonstrated the ability to
sustain a positive and appreciable cash flow from year-to-year. K-Tron's
year-to-year cash flow have progressively increased from 2001 to 2005. ACE'S rating of
K-Tron's Cash Flow: EXCELLENT.
^ Back to Evaluation
E. PROFITABILITY - EXCELLENT
Making a profit is the ultimate goal of every company. A useful gauge of a
company's profitability is its net income (also referred to as "earnings"). Related to a company's outstanding shares of common stocks, the company's total earnings is transformed
to "earnings per share" (or "EPS" for short). EPS is a very popular indicator of a company's profitability and a
powerful variable that influences the price of a company's stock.
K-Tron's annual Net Income, for the past 12 months, of $20.9M is
266.67% higher than the
Industry's Income of $5.70M). For the past 5 years, K-Tron's annual
Net Income are: $1.05M in 12/2001; $3.28M in 12/2002; $3.72M in 01/2003; $6.61M
in 01/2004; and $7.28M in 12/2005. Relative to 12/2001, the Company's net
income increased 212.38% in 2002, 254.29% in2003, 529.52% in 2004 and 593.33% in
2005.
(Refs.
MSN Money\Financials\Statements)
ACE'S gives a preferential rating to a company that have demonstrated the ability to
sustain a positive, appreciable and increasing net income. K-Tron's
year-to-year annual Net Income have progressively increased from 2001 to 2005. ACE'S rating of
K-Trons Profitability: EXCELLENT.
F. PRICE-EARNINGS RATIO (P/E) - GOOD (LOWER THAN INDUSTRY'S AVERAGE)
A stock's Price-Earnings ratio tells us roughly how much investors are willing
to pay per dollar of earnings. Price-Earnings
is a ratio of a company's current share price compared to its per-share
earnings. The P/E ratio is a much better indicator
of the value of a stock than the market price alone.
In general, a high P/E means high projected earnings in the future. As such, the
P/E ratio could be interpreted as the reflection of the market's optimism concerning a firm's growth prospects. To
determine whether a particular P/E is high
or low, take into account a company's growth rates; and the P/Es of other
companies in the same industry. Historically,
the average P/E ratio in the market has been around 15-25.
K-Tron has a P/E ratio of 18.60 (ttm) which is
11.50
points lower - or 47.94% less -
than the
Industry's P/E of 24.01 (ttm).
(Ref.: Yahoo! Finance\Competitors)
ACE'S gives a preferential rating to a company that has a
comparable or relatively lower P/E than the Industry. ACE'S rating of
K-Tron's P/E Ratio: GOOD (LOWER THAN INDUSTRY'S AVERAGE).
^ Back to Evaluation
G. FINANCIAL HEALTH -
GOOD (LOWER THAN INDUSTRY'S AVERAGE).
The assumption of debt, i.e., financial leverage, are used by companies to
finance its assets. The magnitude of the debt's expense component affects the company's net income.
A company with significantly more debt than equity is considered to be highly
leveraged. A popular measure of financial
leverage is the "debt/equity ratio". A higher debt/equity
ratio generally means that a company has been aggressive in financing its growth
with debt. This higher ratio can result
in volatile or negative earnings as a result of the additional interest expense.
Thus, the Debt/Equity Ratio is popularly used
as a measure of a company's financial health.
K-Tron's 0.27 Debt/Equity Ratio (latest 12 months) is 30.76% less than
the Industry's Ratio of 0.39, and 76.92% less than the S&P 500's Ratio 1.17.
.
ACE'S gives a preferential rating to a company that has a
comparable or relatively lower debt ratio than the Industry. ACE'S rating of
K-Tron's
Debt Ratio: GOOD (LOWER THAN INDUSTRY'S AVERAGE).^ Back to Evaluation
H. MARKET CAPITALIZATION - EXCELLENT
Market Capitalization (or market cap for short) is a measure of a company's
size. The market cap provides a broad gauge
of the growth-versus-risk potential of a company. Historically, large caps have
experienced slower growth with lower
risk; whereas small caps have experienced higher growth potential, but with
higher risk.
The market cap of a company is calculated by multiplying the number of its
outstanding shares by the shares' current market price. There are presently six classes of Market Cap: Mega Cap, Big/Large
Cap, Mid Cap, Small Cap, Micro Cap and Nano Cap. ACE'S assigns an
Excellent rating to Small Cap stocks; Good to Mid Caps; Average to Big/Large
Caps; and Below Average to Mega Caps. ACE'S excludes Micro
and Nano Caps in its stock picks.
K-Tron is classified as a small cap value company with a market
capitalization of $154.11M and with outstanding shares of
2.61M.
ACE'S gives a preferential rating to small and mid cap companies. ACE'S rating of
K-Tron's
Market Cap: EXCELLENT.^ Back to Evaluation
I. TRADED VOLUME -
POOR (BELOW AVERAGE)
A stock's price goes up or down based on the laws of supply and demand. Simply
stated, when a stock's price goes up, there must be significant buying demand
for the stock. Volume is the actual number of shares traded daily. Traded volume
could be used as a gauge of the demand for a stock.
K-Tron has an 3-month Average Daily Volume of 3,714 shares; and
a 10-day Average Daily Volume of 6,288 shares.
(Refs.:
Yahoo! Finance\Statistics).
ACE'S assigns an Excellent rating for
+1,000,000 trading volumes; Good for 500,001-999,999 volumes; Average for
100,000 - 500,000 volumes; and Below Average for -100,000 volumes.
ACE'S gives a preferential rating to a company that sustains a
lively trade volume from week-to-week and month-to-month. ACE'S rating of
K-Tron's Traded
Volume: POOR (BELOW AVERAGE).
J. PRICE GROWTH - EXCELLENT
Price growth is the 12-month increase in the price of a
stock (displayed as a percentage). As of 09/18/06, K-Tron had a 3-month growth
rate of 29.7% (vs. the Industry's 4.7% rate), a 6-month rate of 44.9% (vs.
the Industry's 0.50% rate), and a 12-month rate of 81.9% (vs. the
Industry's 19.20% rate).
(Refs.:
MSN Money\Research). ACE'S gives a preferential rating to a company that have
demonstrated a solid capacity for high price growth and outperforming other
stocks in the Industry. ACE'S rating of
K-Tron's
Price Growth: EXCELLENT.