Tags: Makita | MKTAY | SWK | stocks

Should Investors Take a Look at Makita?

By    |   Friday, 30 Sep 2011 03:19 PM

Japanese power tool manufacturer Makita (MKTAY) brings a reputation for producing quality products into its battle for global tool sales against U.S. company Stanley Black & Decker (SWK). Investors should not worry about the somewhat strange ticker symbol for the Makita shares trading as an American Depositary Receipt (ADR); the stock provides solid, if cyclical value.

Makita is best known for its hand power tools, and those tools generated more than 70 percent of the company's sales. The balance of sales is split between garden and household power products and replacement parts sales. Europe is Makita's biggest market, with 42.5 percent of sales in the latest fiscal year. Japan provided 17 percent of sales and North America accounted for just 13.6 percent. The rest of Asia, South America, Africa, and the Middle East produced the remaining 27 percent. Makita is truly a global company, headquartered in Japan.

The company's results were affected by the economic slowdown and reduction in construction activity. Total revenues declined for the fiscal years of 2009 and 2010 before rebounding in fiscal year 2011, which ended in March. Annual revenues increased by 11 percent over the previous year and net income per share grew by 34 percent.

The first quarter of Makita's fiscal 2012 saw revenues increase by 17 percent and net income per share jumped by 56 percent. A portion of the strong growth numbers is due to the effects of the earthquake and tsunami which hit Japan in the spring. The company has forecast second quarter revenue and income growth in a 12 percent to 15 percent range.

Unheralded performance

Makita is not followed by Wall Street and just 3 percent of the company shares are held by U.S. institutional investors. However, the stock has produced significantly better historical performance than rival Black & Decker.

At the time this article was written, MKTAY was up 14 percent from the previous year and SWK was down by the same amount. Over a three year period Makita had outperformed its rival 60 percent to 6 percent. Past results do not predict the future, but that performance is something to think about.

The company reports next on Oct. 31.

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Japanese power tool manufacturer Makita (MKTAY) brings a reputation for producing quality products into its battle for global tool sales against U.S. company Stanley Black Decker (SWK). Investors should not worry about the somewhat strange ticker symbol for the Makita...
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2011-19-30
Friday, 30 Sep 2011 03:19 PM
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