110 Year Old Firm Crushing Wall Street

Imagine you had a checklist for when to buy a stock and as you look down it, every line item is check, check, check. That wouldn’t be too far away from the experience we had looking down through the Brady Corp metrics.

To begin with what on earth is Brady? Not many investors are in fact aware of this company that has a century plus long history. Brady Corp makes products that help people and businesses stay organized and safe. They create things like labels, signs, and safety equipment. For example, they make labels that go on wires and cables to help electricians know which wire is which, and they make signs that warn people about dangerous areas in a workplace.

The company has a couple of divisions, Identification Solutions (IDS) and Workplace Safety (WPS), and it operates in 100 countries so it’s both got worldwide reach and top line diversification.

But what else about this under-the-radar stock makes it so special?

Key Points

• Initiatives like a $100 million share buyback and investments in e-commerce are boosting growth and helping Brady beat EPS estimates.
• Long-term customer relationships, global reach, and a diverse product range give Brady a strong market position and revenue stability.
• Nearly 30 years of dividend increases, solid profit margins, and a low price-to-earnings ratio suggest significant upside potential for Brady Corp’s stock.

Brady Is Crushing Wall Street

Of late, Brady Corp is beating Wall Street across a host of metrics. For example, both revenues of nearly $340 million and earnings per share of $1.09 handily beat expectations.

And we think management had an inkling that there would be an uptick in financials because last year they kicked off a share buyback scheme to the tune of a cool $100 million, no small amount for a $3.1 billion company. The future appears as bright as the recent past with GAAP earnings per share forecast to be in the range of $3.93 to $4.00, which eclipses former predictions.

If those figures are met it will largely be on the back of investments in e-commerce and digital tools that are up 12% since last year.  So too is the recent Nordic ID acquisition set to augment the top line to the tune of $25 million a year. And sales abroad, especially in Latin America and Asia are on the rise, growing at 8% a year.

The result is that Brady Corp is establishing a meaningful competitive advantage.

Can Brady Fend Off Rivals?

To beat competitors, Brady needs a competitive advantage, and it has a few up its sleeve. The first notable one that stands out is established customer relationships that are tenured. The longevity of these contracts ensures revenue stability for the firm, and shareholders.

The global reach of sales also means that Brady has figured out how to operate across different geographies, meaning different laws, currencies, and cultural norms successfully, no mean feat.

The company’s extensive product suite that encompasses everything from signs to safety devices and from printing systems to software means no rival can easily disrupt it.

So, is it a buy?

Is Brady Worth Buying?

Brady Corp looks like a solid long-term investment. It has increased its dividend for almost 30 years, boosted profit margins, and the stock is currently trading at a low price-to-earnings ratio. Better still, the price-to-earnings growth (PEG) ratio is just 0.93, indicating the stock is undervalued compared to its future earnings potential.

Analysts predict the stock price could rise to $76 per share, especially after Brady reported its highest earnings before interest and taxes in the last 12 quarters. Plus, the company has a strong balance sheet that is rich with cash and shy on debt. Overall, a really interesting long-term play.