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Why Clarcor Has Been Considered a Super Stock This Year

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Sep. 19 2016, Updated 10:05 a.m. ET

Clarcor’s YTD returns

Investors who took positions in Clarcor (CLC) stock at the beginning of the year have few reasons to complain. They have earned a solid 26.5% return year-to-date as of September 15 on their investments. During the same period, the S&P 500 has fetched 6.7% in capital gains. 

Stocks of some of Clarcor’s competitors have done even better this year. Donaldson (DCI) has achieved year-to-date returns of 27.5% as of September 15. At 32.8%, the year-to-date returns of Cummins (CMI) are simply spectacular. Although Clarcor competes with the company, filtration is not a major business for Cummins. Its principal business is manufacturing engines and turbochargers for the automotive (FSAVX) and agriculture (MOO) equipment markets. Comparisons with Donaldson are more appropriate due to the similarity in their profiles.

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Pricing multiples of Clarcor and competitors

At 23.08x, Clarcor trades at a fairly high trailing price-to-earnings (or PE) multiple. This is higher than its average five-year PE multiple of 21.3x and closer to the five-year high multiple of 26.5x it traded at earlier in August this year. Its closest competitor, Donaldson, also has similar multiple figures. It’s currently trading at 24.4x compared to a five-year average and five-year high multiples of 21.9x and 26.6x, respectively. At 14.18x, Cummins is currently trading very close to its average five-year PE multiple of 14.07x.

Analyst recommendations

The consensus rating of eight analysts listed on Bloomberg hasn’t changed since the beginning of the year. All analysts have had a “hold” rating on the stock throughout 2016. The average 12-month target price has, however, risen from $52 on January 4 to $62.33 on September 15.

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