Stock Buy: Cantel Medical

Cantel Medical Corp. (CMN: 20.06 +0.28 +1.42%) continues to deliver solid earnings growth.

Company Description

Cantel Medical Corp. is a healthcare company concentrating primarily in infection prevention and control products and diagnostic and therapeutic medical equipment. Cantel serves customers worldwide by designing, developing, manufacturing, marketing and distributing innovative products for the infection prevention and control industry.

Cantel is one of the largest manufacturers of FDA-cleared face masks in the U.S.

Solid Growth at a Decent Price

Analysts expect Cantel to earn $0.26 per share in the second quarter, up 14.5% from the year-ago quarter. For the fiscal year ended July 2010, the Zacks Consensus Estimate is $1.20, up 28% year-over-year. For fiscal 2011, the consensus estimate is $1.32, up 9.7%. As a result, the stock is trading at just 16.5x 2010 consensus estimates and 15.0x 2011 consensus estimates.

Cantel’s solid earnings growth comes from an increase in higher margin sales from its consumables and services businesses, and the company expects that trend to continue in 2010.

In addition, Cantel continues to improve its balance sheet. The company reduced its net debt position to $14.9 million at the end of the first quarter, a 25% decrease from the fourth quarter of 2009. This helped the company lower its debt-to-total capital ratio of 4%, compared to the industry average of 10%.

The company is scheduled to report fiscal second quarter results on March 8.

Impressive Fiscal First-Quarter Results

On December 9, Cantel reported earnings of $0.37 per share, an 85% increase over the year-ago quarter, and $0.10 ahead of the Zacks Consensus Estimate of $0.27. This was the seventh consecutive quarter that Cantel reported an upside surprise. First-quarter revenue grew 10% to $71 million. Cantel noted that its results were driven by “atypically high demand” for its face masks purchased because of concerns about the H1N1 virus.